On March 27, 2020, the CARES (Coronavirus Aid, Relief, and Economic Security) Act was signed into law, creating the Paycheck Protection Program (“PPP”) to provide up to $349 billion in Small Business Administration (SBA) guaranteed loans to small businesses for employee job retention.
Who can apply? Businesses with 500 or fewer employees will be eligible for the PPP program. Businesses can apply THROUGH A FINANCIAL INSTITUTION AT WHICH THAT BUSINESS ALREADY HAS A BANKING RELATIONSHIP. These businesses include eligible non-profits, veterans organizations, tribal concerns, sole proprietorships, self-employed individuals, and independent contractors described in the Small Business Act.
Can I apply with St. Mary’s Credit Union? You may only apply with St. Mary’s Credit Union if you are a member in good standing with at least one current account prior to April 3, 2020.
What can the PPP funds be used for?
- Payroll costs, including benefits;
- Interest on mortgage obligations, incurred before February 15, 2020;
- Rent, under lease agreements in force before February 15, 2020;
- Utilities, for which service began before February 15, 2020
What counts as payroll costs?
- Salary, wages, commissions or tips (capped at $100,000 on an annualized basis for each employee);
- Employee benefits including costs for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal; payments required for the provisions of group health care benefits including insurance premiums; and payment of any retirement benefit;
- State and local taxes assessed on compensation; and
- For a sole proprietor or independent contractor: wages, commissions, income, or net earnings from self-employment, capped at $100,000 on an annualized basis for each employee.
How large can my PPP loan be? Loans can be for up to 2X your average monthly payroll costs from the last year plus an additional 25% of that amount. That amount is subject to a $10 million cap. If you are a seasonal or new business, you will use different applicable time periods for your calculation. Payroll costs will be capped at $100,000 annualized for each employee.
How much of my PPP loan could be forgiven? You will owe money when your loan is due if you use the loan amount for anything other than payroll costs, mortgage interest, rent, and utilities payments over the 8 weeks after getting the loan. No more than 25% of the loan may be used for non-payroll costs. If you follow these guidelines, then up to 100% of your loan could be forgiven. You will owe money if you do not maintain your current staff and payroll, or cannot prove that funds were used to hire back staff.
- Number of Staff: Your loan forgiveness will be reduced if you decrease your full-time employee headcount.
- Level of Payroll: Your loan forgiveness will also be reduced if you decrease salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019.
- Re-Hiring: You have until June 30, 2020 to restore your full-time employment and salary levels for any changes made between February 15, 2020 and April 26, 2020.
- You will owe money when your loan is due if you use the loan for anything other than payroll costs, mortgage interest, rent, and utilities payments over the 8 weeks after getting the loan.
How can I request loan forgiveness? You can submit a request to the lender that is servicing the loan. The request will include documents that verify the number of full-time equivalent employees and pay rates, as well as the payments on eligible mortgage, lease, and utility obligations. You must certify that the documents are true and that you used the forgiveness amount to keep employees and make eligible mortgage interest, rent, and utility payments. The lender must make a decision on the forgiveness within 60 days.
How many PPP loans can I have? Only one.
What will be the interest rate on my PPP loan? A fixed rate of 1.00%APR.
When do I need to start paying back my PPP loan? All payments are deferred for 6 months; however, interest will continue to accrue over this period.
When will my PPP loan due? In 2 years.
Can I pay my PPP loan earlier than 2 years? Yes. There are no prepayment penalties or fees.
Do I need to pledge any collateral for this loan? No collateral will be required.
Do I need to personally guarantee this loan? No. There is no personal guarantee requirement. **However, if the proceeds are used for fraudulent purposes, the U.S. government will pursue criminal charges against you.**
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.
What will I need to submit to St. Mary’s Credit Union to apply?
- All 4 quarters of your business’s 2019 941 tax forms;
- The date that your business was established (can write on application);
- Complete addresses and SSNs of all individuals who own 20% or more of your business;
- Any other documents from 2019 that substantiate PPP-eligible payroll expenses, like employer-paid health insurance premiums and employer contributions to employee retirement plans
St. Mary’s Credit Union will calculate the eligible loan amount using the tax documents that you submit. You affirm that the tax documents are identical to those you submitted to the IRS, and you also understand, acknowledge, and agree that St. Mary’s Credit Union 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.
How can you request information or apply?
Please click the orange REQUEST INFO button and fill out the form and one of our lenders will contact you with more program details. Please note that preference will be given to applications from current St. Mary’s Credit Union members. We highly encourage non-members to apply with their own bank/financial institituion.
The Small Business Administration (SBA) has released the PPP Loan Forgiveness Application and detailed instructions for completing the application in accordance with the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). These documents will help your business seek forgiveness at the conclusion of the eight week covered period, which began when you received your PPP loan funds.
- Options for borrowers to calculate payroll costs using an “alternative payroll covered period” that aligns with borrowers’ regular payroll cycles
- Flexibility to include eligible payroll and non-payroll expenses paid or incurred during the eight-week period after receiving their PPP loan
- Step-by-step instructions on how to perform the calculations required by the CARES Act to confirm eligibility for loan forgiveness
- Borrower-friendly implementation of statutory exemptions from loan forgiveness reduction based on rehiring by June 30
- Addition of a new exemption from the loan forgiveness reduction for borrowers who have made a good-faith, written offer to rehire workers that was declined