KISS Approach to the Paycheck Protection Program

Immediate steps one should take in obtaining a loan under the Paycheck Protection Program.

 

Do you qualify? Yes, if you are: 

• Negatively impacted by Covid-19 (will be determined by your lender), and
• Have fewer than 500 employees, or
• A NAICS code number beginning with 72 (Accommodations and Food Service), having fewer than 500 employees per location.

• The SBA has delegated the authority to approved lenders,
• If your bank is currently making SBA loans, the bank is an approved Lender under the program
• Call your banker, ask about their process and make an appointment.

• Amount one can borrow is 2.5 times average monthly payroll costs for the twelve month period from date of approval/application, not to exceed $10,000,000,
• Payroll costs is defined as the sum of: salary, wage, commissions, or similar compensation; tips or equivalent; payment for vacation, parental, family, medical or sick leave; allowance for dismissal or separation; payment for group healthcare benefits, including insurance premiums; payment of State or local tax assessed on the compensation of employees; and payment of retirement benefits.
• The above shall not include: annual compensation of an individual in excess of $100,000; taxes imposed or with under under Chapter 21 of the Internal Revenue Code (FICA) during the "covered period" (defined as February 15, 2020 to June 30, 2020); any compensation of an employee whose principal place of residence is outside the United States; qualified sick leave wages and family leave wages of which a credit is allowed under the Families First Coronavirus Response Act.
• For sole proprietor or independent contractor: the sum of payments of any compensation that is a wage, commission, income or net-earnings that in not more than $100,000.

Use of proceeds:

• Payroll cost;
• Costs related to continuation of group health care benefits during periods of paid sick, medical or family leave and insurance premiums;
• Payment of interest on mortgage debt excluding any prepayments;
• Rent;
• Utilities; and
• Interest on any other debt obligations that were incurred prior to the "covered period".

• Collateral and personal guarantees are NOT required;
• Potential for debt forgiveness subject to adjustments based on employee and salary level retention;
• Non-forgiven debt will have a term of 10 years at a rate not greater than 4.0%.

 

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