April 3, 2020
Every American is feeling the effects of the Coronavirus Pandemic and at the end of March, Congress passed the $2.2 trillion Coronavirus Aid, Relief and Economic Security Act (CARES Act) to help relieve some of the stress. The CARES Act will provide aid for individuals, States, small businesses and other businesses that have been impacted by COVID-19. While there’s been lots of talk about the stimulus checks that many individuals will receive, another part of the stimulus bill is the Small Business Paycheck Protection Program (PPP). As with most government programs, there is a lot of information to take in about the PPP—we’re here to help. First United Bank is a Preferred Lender with the SBA and we’ve rounded up all the information so that you can get your business back on track. Let’s break it down.
Who is Eligible:
Small businesses (<501 employees), sole proprietors, independent contractors, self-employed individuals, nonprofits, Veterans organizations and tribal businesses are all eligible for PPP loans.
Loan Forgiveness:
These loans 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. No collateral or personal guarantees are required, and neither the government nor lenders will charge small businesses any fees.
Note: You Must Keep Employees on Payroll –
Loan 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.
When to Apply:
Beginning April 3, 2020, small businesses and sole proprietorships can apply. Starting April 10, 2020, independent contractors and self-employed individuals can apply. Because there is a funding cap, you should apply as quickly as possible.
Required Documentation:
- List of Full-Time Equivalent employees on your payroll (Provide pay rates along with any State income, payroll, and unemployment insurance filings).
- Two most recently filed Federal Income Tax Returns for the Borrowers business and any principal owning 20% or more.
- Personal Financial Statement (if Borrower is an Individual). Personal Financial Statement for each principal owning 20% or more of the Borrowing entity.
- Schedule of Liabilities listing all fixed debt obligations.
- 2019 FYE Balance Sheet and Profit & Loss Statement.