Paycheck Protection Program

Update April 10, 2020

Emergency Loans Small Business Guide & Checklist

Update April 3, 2020

Currently, banks are looking for additional guidance from the U.S. Treasury and waiting for the final guidelines and details from the Small Business Administration. Right now, the US Treasury and SBA have everyone in a quagmire. As a result, some banks are “taking” applications but can’t really process them, other banks, like PNC, are holding off until they know the details.

Hopefully, this delay will provide the time necessary for banks to set up access to an online portal when for applicants to officially submit their PPP request. Stayed tuned!

Paycheck Protection Program Update

• The interest rate on the loan portion of this grant is now set at 1%. (previously this was .5%)
• Independent contractors paid by the business are not part of your payroll cost calculation (previously was included as part of payroll)
• NEW FORM the PPP loan application has been revised and updated. Please see the attached to familiarize yourself with the updated form
• Please notice the new form emphasis on using PPP funds properly: The funds will be used to retain workers and maintain payroll or make mortgage interest payments, lease payments, and utility payments, as specified under the Paycheck Protection Program Rule; I understand that if the funds are knowingly used for unauthorized purposes, the federal government may hold me legally liable, such as for charges of fraud.
• Also view an information-gathering checklist for what PNC believes may be required when applying for the program. Please gather these documents and have them ready.
• Worksheet for PPP Loan Calculation

Please note that payroll cost includes Employer paid unemployment tax on employee wages. Make sure you included copies of your 2019 State unemployment quarterly tax forms to support this additional payroll cost to be included in the PPP loan calculation.

Payroll reports for a twelve-month period (ending on your most recent payroll date), which will show the following information:

• Gross wages for each employee, including officer(s) if paid W-2 wages
• Paid time off for each employee
• Vacation pay for each employee
• Family medical leave pay for each employee
• State and local taxes assessed on an employee’s compensation

Can I apply for both an Economic Injury Disaster Loan (EIDL) and a Paycheck Protection Program loan?

Yes, you can apply for both, but you may only receive proceeds from one loan to use for eligible payroll and related expenses. If you used proceeds from a COVID-19 EIDL to pay payroll and related expenses, you may refinance that EIDL loan with a Paycheck Protection Program loan.

It’s critical for you to weigh all options available to you to ensure the best financial decision for your business. To apply for an EIDL, you must apply directly through the Small Business Administration. The PPP is applied for through your bank.

Update March 30, 2020

Under the CARES Act funding was allocated to help small businesses maintain their workforce by providing forgivable loans used to pay for payroll, employee benefits, rent, utilities, and mortgage interest.

Paycheck Protection Program Update

1. Funds 8 weeks of payroll costs
2. At least 75% of forgiven loan amount must be used for payroll costs
3. The loan portion not forgiven payments are deferred for six months
4. Program does not require collateral and no personal guarantees
5. Loan forgiveness is based on employer maintaining or quickly rehiring employees and maintaining salary levels
6. Loan forgiveness will be reduced if full-time employee headcount declines or if salaries and wages decrease.
7. Who is eligible? Small businesses with less than 500 employees, Self-employed, Sole-proprietors and independent contractors
8. When to apply?
• Starting April 3rd small businesses & sole-proprietors can apply
• Starting April 10th independent contractors and Self-employed individuals can apply
9. You are encouraged to apply quickly because there is a funding cap
10. How to apply? Bank and other institutions that are approved to work with the SBA
11. What will the bank require?
• The bank will need to verify that a borrower was in operation on February 15, 2020.
• The bank will need to verify that a borrower had employees for whom the borrower paid salaries and payroll taxes.
• The bank will need to verify the dollar amount of average monthly payroll costs.
• The bank will need to follow applicable Bank Secrecy Act requirements.
12. What can I use these loans for? You should use the proceeds from these loans on your:
• Payroll costs, including benefits
• Interest on mortgage obligations, incurred before February 15, 2020
• The bank will need to verify the dollar amount of average monthly payroll costs.
• Rent, under lease agreements in force before February 15, 2020
• Utilities, for which service began before February 15, 2020
13. What is my interest rate? 0.50% fixed rate
14. When do I need to start paying interest on my loan? All payments are deferred for 6 months; however, interest will continue to accrue over this period.
• When is my loan due? In 2 years.
• Can I pay my loan earlier than 2 years? Yes. There are no prepayment penalties or fees.
15. What do I need to certify? As part of your application, you need to certify in good faith that:
• Current economic uncertainty makes the loan necessary to support your ongoing operations.
• The funds will be used to retain workers and maintain payroll or to make mortgage, lease, and utility payments.
• You have not and will not receive another loan under this program.
• You will provide to the lender documentation that verifies the number of full-time equivalent employees on payroll and the dollar amounts of payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities for the eight weeks after getting this loan.
• Loan forgiveness will be provided for the sum of documented payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities. Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.
• All the information you provided in your application and in all supporting documents and forms is true and accurate. Knowingly making a false statement to get a loan under this program is punishable by law.
• You acknowledge that the lender will calculate the eligible loan amount using the tax documents you submitted. You affirm that the tax documents are identical to those you submitted to the IRS. And you also understand, acknowledge, and agree that the lender can share the tax information with the SBA’s authorized representatives, including authorized representatives of the SBA Office of Inspector General, for the purpose of compliance with SBA Loan Program Requirements and all SBA reviews.

So that you can familiarize yourself with the PPP loan requirements, this is a sample PPP loan application form as of 03/30/20. *This sample PPP application is for information purposes only and might not be the final version required. Please do not complete or submit this form. You must consult with your bank representative for guidance on the proper form(s) and application process.