SBA Payroll Protection Program

Due to Coronavirus (COVID-19) crisis, the CARES Act was passed and this new temporary loan program was created to help small businesses and provide a loan forgiveness option for businesses that maintained or rehired their workforce.
LOAN ELIGIBILITY
  • To qualify, businesses must have been in operation by February 15, 2020.
  • Eligible businesses include small businesses, 501(c)(3) organizations, veterans’ groups or tribal businesses with 500 or fewer employees, or businesses that otherwise meet SBA size standards. This includes sole proprietors, independent contractors and other self-employed individuals. Certain accommodation, lodging and food services businesses with no more than 500 employees per physical location are also eligible.
  • Recipients can use the loans for certain payroll costs — including salaries and commissions up to $100,000 per individual, regular paid leave and group healthcare benefits — as well as certain mortgage, rent and utility payments.
  • A recipient must certify that their business has been affected by COVID-19 and that they will use the funds to retain workers, maintain payroll and meet other debt obligations. Loans will also be subject to the qualification requirements,

LOAN DETAILS
  • Loans are available as funding allows through June 30, 2020.
  • Loans under the program are fully guaranteed by the U.S. government.
  • APPLY THROUGH BUSINESS BANK or SBA approved Lender
  • Eligible businesses can receive loans up to 2.5 times their average monthly payroll (not to exceed $10 million).
  • 1 % fixed interest rate on loan amount not forgiven
  • 2 years term, no prepayment penalties or fees
  • No collateral or personal guarantee required
  • All payments are deferred for 6 months; however, interest will continue to accrue over this period
  • All owners with at least 20% interest will be required to sign SBA attestation

DOCUMENT PREPARATION
  • 2019 Payroll Cost and YTD Payroll Cost through February 15, 2020
  • Number of employees as of December 31, 2019
  • Number of employees as of February 15, 2020
  • Industry or business classification (NAICS Code which can be found on tax return)
  • IRS Form 940 Employers Annual Federal Unemployment Tax Return (FUTA)
  • IRS Form 941 Employer’s Quarterly Federal Tax Return
  • Payroll Summary Report 2019 with corresponding bank statements
  • W2 Summary
  • List of employees earning more than $100,000 in compensation (salary, wages, commission and tips)
  • 1099 Summary
  • Breakdown of payroll benefits (vacation, allowance for dismissal, group healthcare benefits, retirement benefits, etc.)

OTHER DOCUMENTS
If you are applying through a bank that you currently do not have a business banking relationship, then you will need to verify your entity ownership.
  • Trust: Certificate of Trust or Trust Agreement with Amendments
  • Corporation: Articles of Incorporation, By-Laws, Certificate of Entity
  • 501c3 Nonprofit:  Articles of Incorporation, By-Laws, Certificate of Entity, IRS Status letter 
  • Partnership: Partnership Agreement, Articles of Association, Certificate of Limited Partnership
  • Limited Liability Company: Articles of Organization and Operating Agreement
  • DBA: Fictitious Business Name Statement

LOAN FORGIVENESS
Loan forgiveness is available to borrowers that spent an the loan amount on the following items during the 8-week period beginning on the date of the origination of the loan.
  • Payroll costs, must be 75% of funds spent (using the same definition of payroll costs used to determine loan eligibility)
  • Interest on the mortgage obligation incurred in the ordinary course of business
  • Rent on a leasing agreement
  • Payments on utilities (electricity, gas, water, transportation, telephone, or internet)
  • For borrowers with tipped employees, additional wages paid to those employees
  • The loan forgiveness cannot exceed the principal.
  • Loan forgiveness can be reduced for 

Schedule an appointment to apply with Cohoon Legal's assistance.