Here is everything we know regarding the paycheck protection program for small businesses and how you can request
MWI works with a lot of small businesses that have been negatively impacted by COVID-19. Right now, thousands of business owners are facing some of the toughest decisions they’ve ever dealt with.
Having less than 500 employees, MWI falls into the category of small business and find ourselves in that same boat.
We’ve been closely following the CARES ACT as it went through Congress and immediately submitted our Payroll Protection Program (PPP) application when the CHASE BANK portal opened on Friday, April 3rd. This funding option is a lifeline that many small businesses need to deal with the issues caused by this unexpected pandemic.
That’s what this blog will cover. We wanted to create a simple, straight forward resource on the PPP with all of the information we’ve gathered over the last few weeks. Please note that this information is updated on a daily basis, so please consult your Accountant or Banking Institution to take action. It includes what you need to know about the Paycheck Protection Program, a resource list, an FAQ section, and steps to get started.
What is the Paycheck Protection Program
This is a new $349 billion Small Business Association (SBA) lending program with a 100% government guarantee. A traditional SBA loan has a 75% guarantee 7(a) loans.
The loan is specifically designed for small businesses under 500 employees (more on that later).
Frequently Asked Questions
When Can I Sign Up?
- Starting April 3rd small businesses and sole proprietors can apply
- Starting April 10th independent contractors and self-employed individuals can apply
Who Can Apply?
All businesses – including nonprofits, veteran organizations, Tribal business concerns, sole proprietorships, self-employed individuals, and independent contractors with 500 or fewer employees can apply.
If your organization has over 500 employees, there are exceptions.
- Your business operates in the hotel and food services industries
- Your business is a franchise in the SBA’s Franchise Directory
- Your business receives financial assistance from small business investment companies licensed by the SBA
Covered Loan Period
The covered loan period is February 15, 2020 through June 30, 2020
What Can I Use these Loans for?
It is meant to be used for payroll costs and benefits. There are certain exceptions including:
- Interest on mortgage obligations (incurred before February 15, 2020)
- Rent (under lease agreements before February 15, 2020)
- Utilities (service began before February 15, 2020)
Fully Forgiven? What does that mean?
Funds are provided in the form of loans that will be fully forgiven when used for payroll costs, interest on mortgages, rent, and utilities over the 8 week period after the loan is made. (At least 75% of the forgiven amount must have been used for payroll). Also, employee and compensation levels are maintained. Loan payments will also be deferred for six months. No Collateral or Personal guarantees are required.
Payroll costs are capped at $100,000 on an annualized basis for each employee. No more than 25% of the forgiven amount may be used for non-payroll costs.
Steps to Signing Up
- Reach out to your bank to fill out your paperwork for the Payroll Protection Program
- Wait in line for your bank to contact you and process your application (that includes a phone call and review)
That’s it! Real easy. So don’t delay as when this money is gone it’s gone.
The US Small Business Administration does a great job listing out resources and what to do to sign-up:
The website is more built for the public than business owners, but some details exist on the loan process.
Any existing SBA lender or FDIC bank or credit union can process your application, but we’ve included links to all the big banks and how to start the process:
On April 2nd, Chase bank hosted a webinar to go through all the information and answer questions. I recommend business owners listen to the recording.
The Federal Reserve just temporarily lifted the asset cap on Wells Fargo, so they will be issuing loans again. If you bank with Wells Fargo, act fast!