Rusk County Economic Development Corporation

COVID-19 Paycheck Protection Program – (SBA)

PAYCHECK PROTECTION PROGRAM (PPP) INFORMATION:

The CARES Act Paycheck Protection Program (PPP) authorizes up to $349 billion in forgivable loans to small businesses to pay their employees during the COVID-19 crisis. All loan terms will be the same for everyone.

The loan amounts will be forgiven as long as:

1. The loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs over the 8 week period after the loan is made; and
2. Employee and compensation levels are maintained.

Payroll costs are capped at $100,000 on an annualized basis for each employee. Due to likely high loan demand, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.    Any unforgiven amounts will be considered a loan.   Loan payments will be deferred for 6 months.

When can I apply?

1. Starting April 3, 2020, small businesses and sole proprietorships with employees can apply for and receive loans to cover their payroll and other certain expenses.

Starting April 10, 2020, independent contractors and self-employed individuals can apply for and receive loans to cover their income loss and other certain expenses.

Where can I apply?

You can apply through any existing SBA lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved by Treasury and enrolled in the program. You should consult with your local lender as to whether it is participating. Visit www.sba.gov for a list of SBA lenders.   The PPP loan is not a direct loan from the SBA.

Who can apply?

All businesses – including nonprofits, veterans organizations, Tribal business concerns, sole proprietorships, self-employed individuals, and independent contractors – with 500 or fewer employees can apply.

What do I need to apply?  

You will need to complete the Paycheck Protection Program loan application and submit the application with the required documentation to an approved lender that is available to process your application.  If you wish to begin preparing your application now, you can download a sample form to see the information that will be requested from you.

 What other documents will I need to include in my application?

You will need to provide your lender with payroll documentation.  Download a sample form from the link above and gather what is needed on that form to prepare.

How long will this program last?

Although the program is open until June 30, 2020, we encourage you to apply as quickly as you can because there is a funding cap and lenders need time to process your loan.

What can I use these loans for?

You should use the proceeds from these loans on your:

1. Payroll costs, including benefits;
2. Interest on mortgage obligations, incurred before February 15, 2020;
3. Rent, under lease agreements in force before February 15, 2020; and
4. Utilities, for which service began before February 15, 2020.

What counts as payroll costs?

Payroll costs include:

1. Salary, wages, commissions, or tips (capped at $100,000 on an annualized basis for each employee);
2. 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.
3. State and local taxes assessed on compensation; and
4. For a sole proprietor or independent contractor: wages, commissions, income, or net earnings from self-employment, capped at $100,000 on an annualized basis.

How large can my loan be?

Loans can be for up to two months of your average monthly payroll costs from the last year plus an additional 25% of that amount.   If you are a seasonal or new business, you will use different applicable time periods for your calculation.

How much of my loan will 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 utility payments over the 8 weeks after getting the loan. Due to likely high number of loans, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.

You will also owe money if you do not maintain your staff and payroll.

1. Number of Staff: Your loan forgiveness will be reduced if you decrease your full-time employee headcount.
2. 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.
3. Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels.  Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.

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 employee full-time equivalent employees and pay rates, as well as the payments on eligible mortgage, lease, and utility obligations.

What is my interest rate?     0.50% fixed rate.

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.    There are no prepayment penalties or fees.

Do I need to pledge any collateral for these loans?

No collateral is required.

Do I need to personally guarantee this loan?

There is no personal guarantee requirement.