SBA Paycheck Protection Loan Program

For the borrower application, click here. For borrower resources, click here. For lender resources, click here.

Congress created the new SBA Paycheck Protection Program to provide small businesses with zero-fee, one percent interest loans of up to $10 million to cover payroll and other operating expenses. Up to 8 weeks of payroll, mortgage interest, rent, and utility costs can be funded with this loan, and ultimately forgiven. Payments on principal are deferred for six months, though interest will accrue during this period. Small businesses will be able to apply if they were harmed by COVID-19 between February 15, 2020, and June 30, 2020. This program is retroactive to February 15, 2020, in order to help bring workers who may have already been laid off back onto payrolls. 

For up-to-date information on the Paycheck Protection Program from the Treasury Department, click here.

Key Dates:

April 3, 2020 - Small businesses and sole proprietorships can apply for and receive loans to cover their payroll and other certain expenses through existing Small Business Administration (SBA) lenders.

April 10, 2020 - Independent contractors and those who are self-employed can begin applying for and receiving loans to cover their payroll and other certain expenses through existing Small Business Administration (SBA) lenders.

August 8, 2020 - Loans will be available through this date. 

Eligibility

You are eligible if:

  • Your business or entity was in operation on February 15, 2020; and

  • Your entity is not included in this list of ineligible businesses (nonprofits aside); and

  • You are a small business, a 501(c)(3) nonprofit organization, a 501(c)(19) veterans organization, tribal business concern, or other business that has fewer than 500 employees, or the applicable size standard in number of employees for the North American Industry Classification System (NAICS) industry as provided by SBA, if higher; or

  • You are a sole proprietorship, an independent contractor, or self-employed; or

  • You are a business that employs not more than 500 employees per physical location and your business has an NAICS code beginning with 72 (accommodations and restaurants), for which the usual SBA affiliation rules are waived. 

  • Affiliation rules are also waived for any business operating as a franchise that is assigned a franchise identifier code by the SBA, and any company that receives funding through a Small Business Investment Company.

 Loan Size:

  • Your maximum loan size is 250 percent of average monthly payroll costs for the one-year period before the loan is made. If you are a seasonal entity, the maximum loan size is 250 percent of average monthly payroll costs from February 15, 2019 to June 30, 2019, or you can opt to choose March 1, 2019, as the seasonal time period start date. 

  • If you have an outstanding SBA Economic Injury Disaster Loan (EIDL) made between January 31, 2020 and April 3, 2020, that was used for payroll costs, that balance is added to your maximum PPP loan size, in order to refinance the higher-interest EIDL using the PPP loan. 

  • If you were not in business this time last year, your maximum loan is equal to 250% of your average monthly payroll costs between January 1, 2020, and February 29, 2020.

  • The loan maximum in all cases is $10 million.

Payroll costs for the purposes of determining your loan size include:

  • Compensation (e.g., salary, wage, commission, cash tips)

  • Payment for vacation, parental, family, medical, or sick leave

  • Allowance for dismissal or separation

  • Payment required for group health care benefits, including insurance premiums

  • Payment of any retirement benefit

  • Payment of State or local tax assessed on the compensation of employees

The following costs do not count towards your loan size: compensation over $100,000 to any individual, Federal employment taxes (including FICA and income taxes withheld from employee pay), compensation for employees outside of the United States, and required leave under the Families First Coronavirus Response Act (for which reimbursement is provided via a separate tax credit).

Use of Loan Funds:

You may use the funds for:

  • Payroll costs (all costs included above)

  • Costs related to group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums

  • Employee salaries, commissions, or similar compensation (except as excluded above)

  • Payments of interest on any mortgage (but not payment or prepayment of principal)

  • Rent

  • Utilities

  • Interest on any other debt obligations that were incurred before February 15, 2020.

Loan Terms:

For any amounts not forgiven, the loan term is 2 years, the interest rate is 1 percent, and there are neither loan fees nor prepayment fees (SBA will establish application fee caps for lenders that charge them).

Loan Forgiveness:

You can apply to your lender to forgive your loan for the amount of payroll costs plus payments of mortgage interest, rent, and utilities incurred during the 8-week period after the loan is disbursed. Note that at least 75 percent of the forgiveness amount shall be for payroll costs—leaving 25 percent of the loan for other qualifying costs. 

The amount that can be forgiven is conditioned on maintaining employees and wages:

  • Your loan forgiveness will be reduced if you decrease your full-time employee headcount.

  • 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.

    • If you made reductions during this period and you do not restore your FTE and salary levels back to the levels they were on February 15, 2020 by June 30, 2020, the portion of your loan that is eligible to be forgiven will be reduced according to a comparison between your final FTEs and salary levels and:

      • Your FTEs during the period of—at the borrower’s option—February 15, 2019 to June 30, 2019, or January 1, 2020 to February 29, 2020.

        • Further, seasonal businesses have a third base period option of February 15, 2019 to June 30, 2019.

      • Your salary levels for each employee during the most recent full quarter during which the employee was employed before your PPP loan originated. 

        • Note that salary reductions are calculated on an employee-by-employee basis and they only reduce the amount of loan forgiveness if the reductions exceed 25 percent. Also, reductions for employees who earned more than a $100,000 annualized rate at any point in 2019 are not penalized at all. 

You must apply through your lender for forgiveness and provide:

  • Documentation verifying the number of employees on payroll, their pay rate, IRS payroll and state income tax filings, and unemployment insurance filings;

  • Documentation verifying payments of rent, mortgage interest, utilities, and other debt; and

  • Certification from your business that the documentation provided is true and that amount of the loan that is being forgiven was used in line with the program’s requirements.

Any loan amounts not forgiven are carried forward as an ongoing loan with a term of 2 years, at an interest rate of 2 percent. Principal will continue to be deferred, for a total of 6 months after disbursement of the loan.

Can I use a Paycheck Protection Loan with other SBA loans?

Yes, you may apply for a Paycheck Protection Program loan and other SBA loans, including the SBA Economic Injury Disaster Loans, 7(a) loans, 504 loans, and microloans. However, you may not use funds from each of these programs for the same purposes. If you previously received an Economic Injury Disaster Loan for coronavirus-related assistance, and you used the loan for payroll costs, then you will refinance that loan at a lower interest rate as part of receiving a Paycheck Protection Program loan. If you previously received a EIDL advance grant, the amount of the grant will be subtracted from the amount of the Paycheck Protection Program loan that can be forgiven. 

More Information

If you have additional questions, my staff will help get you answer. Contact my nearest office here.

For more information about SBA loan programs, please visit the Small Business Administration website. More information about small business programs in the CARES Act and other resources for small businesses can be found on the U.S. House of Representatives Small Business Committee website.

If you need additional assistance, please reach out to your local Small Business Development Center, Women’s Business Center, SCORE chapter, or SBA District Office.