Small Business Covid-19 Stimulus Answers Updated Daily

The 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: 

 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 

 Employee and compensation levels are maintained. 

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

When can I apply? 

 Starting April 3, 2020, small businesses and sole proprietorships can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders. 

 Starting April 10, 2020, independent contractors and self-employed individuals can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders. 

 Other regulated lenders will be available to make these loans as soon as they are approved and enrolled in the program. 

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 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. 

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. Businesses in certain industries can have more than 500 employees if they meet applicable SBA employee-based size standards for those industries (click HERE for additional detail). 

For this program, the SBA’s affiliation standards are waived for small businesses (1) in the hotel and food services industries or (2) that are franchises in the SBA’s Franchise Directory  or (3) that receive financial assistance from small business investment companies licensed by the SBA. Additional guidance may be released as appropriate.  

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 by June 30, 2020. 

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

You will need to provide your lender with payroll documentation. 

Do I need to first look for other funds before applying to this program? 

No. We are waiving the usual SBA requirement that you try to obtain some or all of the loan funds from other sources (i.e., we are waiving the Credit Elsewhere requirement). 

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. How many loans can I take out under this program? Only one. 

What can I use these loans for? You should use the proceeds from these loans on your: 

 Payroll costs, including benefits; 

 Interest on mortgage obligations, incurred before February 15, 2020; 

 Rent, under lease agreements in force before February 15, 2020; and 

 Utilities, for which service began before February 15, 2020. 

What counts as payroll costs? 

Payroll costs include: 

 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 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. That amount is subject to a $10 million cap. I

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 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 utilities payments over the 8 weeks after getting the loan. Due to likely high subscription, 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.  

 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. 

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. 

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. Can I pay my loan earlier than 2 years? Yes. There are no prepayment penalties or fees. 

Do I need to pledge any collateral for these loans? No. No collateral is 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.  

 You acknowledge that the lender will calculate the eligible loan amount using the tax documents you submitted. 

You affirm that the tax documents are identical to those you submitted to the IRS. And you also understand, acknowledge, and agree that the lender 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.

The Paycheck Protection Program provides small businesses with funds to pay up to 8 weeks of payroll costs including benefits. Funds can also be used to pay interest on mortgages, rent, and utilities. 

Fully Forgiven Funds are provided in the form of loans that will be fully forgiven when used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll). Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees. 

Must Keep Employees on the Payroll—or Rehire Quickly 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. 

All Small Businesses Eligible Small businesses with 500 or fewer employees—including nonprofits, veterans organizations, tribal concerns, self-employed individuals, sole proprietorships, and independent contractors— are eligible. Businesses with more than 500 employees are eligible in certain industries. 

When to Apply Starting April 3, 2020, small businesses and sole proprietorships can apply. Starting April 10, 2020, independent contractors and self-employed individuals can apply. We encourage you to apply as quickly as you can because there is a funding cap. 

How to Apply You can apply through any existing SBA 7(a) 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 and enrolled in the program. 

You should consult with your local lender as to whether it is participating. All loans will have the same terms regardless of lender or borrower. 

A list of participating lenders as well as additional information and full terms can be found at www.sba.gov. The Paycheck Protection Program is implemented by the Small Business Administration with support from the Department of the Treasury. Lenders should also visit www.sba.gov or www.coronavirus.gov for more information.

As many of you know, SBA Guidelines for Paycheck Protection Program (PPP) are being released to participating banks. If you would like a list of documents you will need on hand to calculate your eligible loan amount.


This is not official but this is what we expect the SBA guidelines to look like for the SBA Payroll Protection Program under the CARES ACT. Please start to gather these documents so you are prepared when the SBA releases guidelines to the participating banks.

Needed to help you calculate the eligible loan amount:

• Payroll reports for 2019 and 2020 year to date showing the following broken down by employee and/or officers:
- Gross wages
- Paid time off
- Paid vacation
- Pay for family medical leave
- State and local taxes (form 940, 941 or 944)
- 1099s for independent contractors (if applicable)
• Completed 2019 tax return OR 2019 Profit and Loss Report and Balance Sheet
• Filed 2018 Business Tax Return
• Documentation showing:
- Funds received in the form of an Economic Injury Disaster Loan since Jan. 31, 2020, if any
- Payments for group health care benefits including premiums paid in 2019 to 2020 year to date
- Payment of any retirement benefits paid in 2019 and 2020 year to date

Needed for verification of forgiveness amount:

• Quarterly IRS forms 940, 941 or 944 for the following dates: ∞ March 31, 2019 and June 30, 2019 ∞ March 31, 2020 and June 30, 2020, when available
• Documentation in the form of canceled checks, payment receipts and bank statements showing payment of the following items from Feb. 15, 2020 to June 30, 2020:
- Mortgage Interest
- Rent payments
- Utilities

SBA Small Business Disaster Relief loan verse the Cares Act  

There are some big differences between the Disaster Relief Loan and the proposed Cares Act. If you have anyone applying for the disaster relief loan, please advise them to wait until we all have full clarity on the Cares Act as well. This is a fluid situation as the stimulus package works through the final signature from the president. The Cares Act may be the better alternative and you may not be eligible for it if you take the disaster relief loan option.   

Here are some of the proposed differences:  

SBA’s disaster loan program: This is a loan of up to $2MM at 3.75% interest for up to 30 years. This is up and running now but is not administered or issued through the banks. To apply, borrowers will need to apply on the SBA website with administration through their respective governor’s offices so long as their state is under a state of emergency and the underwriting is being done directly at the SBA offices.  
The Cares Act.    

•        Overall: The law will expand the Small Business Act to provide up to $300 billion (likely to increase from negotiations) in loan guarantees in favor of SBA Lenders making SBA Loans to any business concern, private or public nonprofit that employs not more than 500 employees.

•        Amount: The maximum loan amount for an applicant is the lesser of (i) $10 million dollars or ((ii) the average total monthly payments for payroll, mortgage, rent, and other debt payments of the applicant incurred during the 1 year period before the date on which the loan is made multiplied by 4)

•        Use of Proceeds: During the period from March 1, 2020, to December 31, 2020, the loan proceeds may be used to pay payroll (including sick leave), salaries, mortgage payments, rent, utilities, and other debt obligations (so long as such other debt obligations were incurred prior to March 1, 2020)

•        Evaluation: The creditworthiness evaluation and underwriting process are essentially eliminated other than determining whether the business was in operation on March 1, 2020, and had employees for which the borrower paid salaries and payroll taxes.

•        Deferral of Payments: The complete deferral of loan payments would be permitted for up to one year, and the SBA will provide guidance on the deferment process within 30 days.

•        Guaranty: The SBA will guarantee 100% of the balance of the loan outstanding at the time of disbursement through December 31, 2020, and thereafter, 75% of the balance of the loan outstanding at the time of disbursement if it exceeds $150,000 and 85% if it’s less than that. 

•        Loan Forgiveness:  Borrowers will be eligible for forgiveness of the loans up to the sum of the total payroll costs plus payments on debt obligations (if such debt obligations were incurred prior to March 1, 2020) expended during the period from March 1, 2020, to June 30, 2020. This forgiveness amount is reduced proportionally by the percentage of full-time employees laid off by the borrower compared to the borrower’s 2019 employment levels from March - June 2019.  The amount is forgiven also excludes wages of an employee in excess of $33,333 during the four-month period. The amount forgiven is not considered taxable income. 

•        SBA Lenders: The Treasury Secretary is being authorized to establish a process by which lending institutions that aren’t currently authorized as SBA Lenders will be able to provide these types of loans for the duration of the emergency.  
We should also consider that incurrence of the above loans/guarantees is likely currently prohibited under any existing loan agreement between a borrower and lenders so due thought should be given to considering how to address the incurrence of these loans without causing defaults under existing agreements.


This information is credited to Mike Ramsay
Senior Business Development Officer
Bank United

More than half of 1,500 respondents in a recent Goldman Sachs survey expect their small business to survive three months or less under current circumstances, yet more than 67% don’t know how to access emergency funding.

Businesses across the country have been hit and they have been hit hard. With the passage of the Federal Stimulus Package comes hope and confusion. The stimulus bill will provide much needed assitance and a boost to small business.

As it stands, the stimulus package includes $350 billion in small business loans. But these loans don’t need to be paid back. The money would have to be used for expenses like payroll, insurance, rent and utilities – but the loan would then be forgiven.

The Senate’s plan currently supports American small businesses in the following ways, according to policy experts:

• A $350 billion forgivable loan program designed to ensure that small businesses do not lay off employees.

• A 50% refundable payroll tax credit on worker wages will further incentivize businesses, including ones with fewer than 500 employees, to retain workers.

• Looser net operating loss-reduction rules that will allow businesses to offset more.

• A delay in employer-side payroll taxes for Social Security until 2021 and 2022.

• Sole proprietors and other self-employed workers could be eligible for the expanded unemployment-insurance benefits the bill provides.

• A portion of the $425 billion in funds appropriated for the Federal Reserve’s credit facilities will target small businesses.

At a whopping 57 million, self-employed people make up a huge piece of the country’s economic puzzle. But during a global pandemic, when business starts drying up, those who work for themselves are among the most vulnerable.

Finally, the CARES Act includes $349 million for the U.S. Small Business Administration (SBA) to guarantee loans through its 7(a) loan program. 

The SBA is also offering Economic Injury Disaster Loans for qualifying small businesses. These are low-interest loans with terms potentially as long as 30 years for small businesses and nonprofits. 

You can apply for an SBA loan through it's site. Be prepared to provide the following information:

• Tax Information Authorization (IRS Form 4506T), completed and signed by each principal or owner
• Recent federal income tax returns
• Personal Financial Statement (SBA Form 413)
• Schedule of Liabilities listing all fixed debts (SBA Form 2202)
• You may also need to provide profit and loss statements, recent tax returns, and balance sheets. 

Are you still feeling overwhelmed or confused? Join us next week for our FREE Webinar with expert guest, Steve Mariani from Raleigh, NC. Steve will assist business owner with the most up to date information and help clarify some of the more confusing elements of the stimulus package.

Register below!

There are roughly 31 million small businesses that employ 59 million workers across the nation, according to the Small Business Administration’s Office.

The Coronavirus Aid, Relief and Economic Security Act, includes a $350 billion loan program for businesses with fewer than 500 employees (including sole proprietors, independent contractors and anyone otherwise self-employed). 

Under the bill, loans can be used to meet payroll and cover certain other expenses like utilities or insurance premiums. And, borrowers will be able to apply for loan forgiveness.

The new loans will be available through private financial institutions — i.e., banks, credit unions — that participate in the Small Business Administration’s lending network.

Under the CARES Act, the loans can be for as much as 2.5 times payroll or $10 million, whichever is less. Payments can be deferred by up to a year, and businesses will be able to apply for forgiveness of the loan (or a portion of it), based on the amount used during the eight weeks following loan approval. Any amount not forgiven would have a maximum interest rate of 4%.

The bill also waives typical SBA loan requirements that credit must be unavailable elsewhere and that the borrower must personally guarantee the amount or provide collateral.

Additionally, small businesses applying for a loan will be eligible for up to a $10,000 emergency grant — which would be subtracted from the forgiven loan amount — that would be issued within three days of the application being received.

If you are a small-business owner hoping to qualify for one of these loans, start by reaching out to your bank or lending institution.

Register for our FREE Webinar for more details and clarity.

Protecting your small business and your employees during the current COVID-19 medical event is our priority. We are here to help you navigate this uncertain time and keep you informed. We are monitoring daily developments and have a detailed plan to ensure we can continue providing critical financial resources.  Today, we would like to update you on new details from the Small Business Administration (SBA). Our primary source of information is from the SBA website and their page, Coronavirus (COVID-19): Small Business Guidance and Loan Resources. We will monitor new developments from the SBA and other government program partners. Below, you will find current and pending programs with the SBA.      The recent legislative passing of the Coronavirus Aid, Relief and Economic Security (CARES) Act is intended to assist business owners with current financial needs to assist their efforts in working through this medical and economic event.  Economic Injury Disaster Loans and Loan Advance (EIDL Loans)In response to the Coronavirus (COVID-19) pandemic, small business owners in all U.S. states, Washington D.C., and territories are eligible to apply for an Economic Injury Disaster Loan advance of up to $10,000.  The SBA’s Economic Injury Disaster Loan program provides small businesses with working capital loans of up to $2 million that can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing. The loan advance will provide economic relief to businesses that are currently experiencing a temporary loss of revenue. Funds will be made available within three days of a successful application. EIDL loan application link. You will be working directly with the SBA.    Paycheck Protection Program (PPP) Loans Final SBA rules are pending on this program. The legislative intent, subject to the SBA finalization, would provide cash-flow assistance through 100 percent federally guaranteed loans to employers who maintain their payroll during this crisis with employees of 500 or less. PPP has several attractive features, such as forgiveness of up to 8 weeks of payroll based on employee retention and salary levels, no SBA fees, and payment deferral for up to 1 year.  These loans will be available through June 30, 2020.  This program is currently pending, but we expect finalization in the next few weeks. Reliable resources have led us to believe this program will be primarily handled through your local Commercial Loan Officer.   SBA Debt Relief The SBA Debt Relief program will provide a reprieve to small businesses as they overcome the challenges created by this medical event. Under this program:

• The SBA will pay the principal and interest of new 7(a) loans issued before September 27, 2020.
• The SBA will pay the principal and interest of current 7(a) loans for six months.

SBA Express Bridge Loans This program allows small businesses who currently have a business relationship with an SBA Express Lender to access up to $25,000 with less paperwork. SBA Express Bridge Loans can provide vital economic support to small businesses to help overcome the temporary loss of revenue many are experiencing and can be a term loan or used to bridge the gap while applying for direct SBA Disaster Assistance.

• Up to $25,000
• Fast turnaround
• Will be repaid in full or in part by proceeds from the EIDL loan