COVID-19 Paycheck Protection
Once the governor of your state issues a disaster declaration, businesses in your state are eligible for SBA Disaster Loans under the Economic Injury Disaster Loan declaration made by President Trump on March 12.
Comprehensive Guide to COVID-19 Paycheck Protection & Relief Funding
Let’s save American businesses together!
What Business Owners Need to Know
- There are several economic relief options available at present, the newest is the Paycheck Protection Program (PPP) enacted on March 27 when the CARES Act was fully instated.
- This program is separate from the SBA Disaster Loan (EIDL) and the application process is also different.
- The SBA Disaster Loan (EIDL) is being managed by the SBA directly and you can apply on SBA.GOV.
- The Paycheck Protection Program (PPP) is managed by the SBA and the Treasury Department jointly and the application process is handled by licensed SBA Lenders.
- You can apply for PPP here.
- The PPP is available to businesses, sole proprietors and independent contractors (1099-MISC).
- Lenders must issue a decision on PPP Loans to applicant in 60 days and if approved, the post-approval to funding process begins. Timelines for the approval to fund process is unknown at present.
- Demand has been very high and lead times long. If you are in immediate need of funds we recommend you apply for a bridge loan.
- PPP funds ran out on April 16 and Congress is discussing supplementing the program with another $350 billion. We believe these funds will be available within 1-2 weeks of today (April 20).
Bridge Loan Product Overview
- Taycor has developed a Bridge Loan Product in response to the U.S. economic fallout associated with COVID-19.
- Bridge Loans can be issued in as little as 48 hours.
- Terms vary based on time in business and credit history, but the following options are available for qualified applicants:
- 5-Year Term Loans, Lines of Credit, & Accounts Receivable Financing
- Low Single Digit Rates
- Monthly Payment Options
- No Pre-Payment Penalty
- It is important to note that we are in a dynamic market and terms may change without notice based on shifts in the economic landscape.
- We recommend that businesses with immediate needs apply while these rates and terms are available.
- We are now requiring month-to-date bank statements along with our standard prior 3-6 months bank statements.
- Other conditions may apply based on borrowing history and industry.
Paycheck Protection Program Overview
- As of March 27, the Federal Government enacted the Paycheck Protection Program (PPP), part of the CARES Act, to provide capital to small businesses to help them meet their short-term ongoing expenses, including payroll.
- PPP borrowers will not be required to repay the portion of the loan that is used for payroll, rent or utilities. This is referred to as loan forgiveness. If the loan is used for anything other than these purposes it must be repaid at a rate of up to 4%.
- SBA Upfront Guaranty Fee is waived for PPP
- Term will be based on SBA 7(a) guidelines and maturity should not exceed 10-years
- NO prepayment penalty
- Maximum Loan Size
- $10 million OR
- Applicant’s average total monthly payroll costs for 2019 or new businesses: average from Jan 1 to Feb 29, 2020 or seasonable businesses: average for Feb 15 to June 30, 2020 X 2.5 (contact your accountant when calculating seasonal or new business loan amount).
- PLUS the outstanding amount of an SBA Disaster Loan made between Jan 31 and the date which the covered loans are available to be refinanced.
- Collateral: No collateral will be required
- Personal Guarantee: No personal guarantee will be required except
- Government will have recourse against borrower (shareholder, member or partner) if loan proceeds are used for purposes other than authorized by the law
- Applicant was operating on 2/15/2020 and
- Had employees it paid salaries and payroll taxes for OR paid independent contractors (reported on a Form 1099-MISC). Independent contractors should apply unilaterally.
- Additional Eligibility
- Small Businesses including sole proprietorships, independent contractors and eligible self-employed individuals
- Nonprofit organizations as described in section 501(c)(3)
- Veterans organizations as described in section 501(c)(19)
- Eligible Business Size:
- 500 employees OR
- If applicable, the size (in number of employees) established by SBA (13 CFR 121) EXCEPT
- For businesses in industries with NAICS codes beginning with 72 (accommodation and food services) that have more than 1 physical location.
- Allowed Use of Loan Proceeds
- Costs related to group health benefits
- Employee salaries, commissions or similar compensation
- Interest payments on Mortgage
- Interest on other debt incurred before the covered period
- Refinancing of a Disaster Loan made between Jan 1 and the date on which the covered loans were made available
- Statute also allows any other 7(a) use, but these uses will NOT be forgiven, and loan repayment will be required.
- Payroll shall not include
- Compensation for employees making a salary in excess of $100,000/year as prorated for the covered period.
- Any compensation of an employee whose principal residence is outside the U.S.
- Qualified sick leave wages for which credit is allowed under section 7001 of the Families First Coronavirus Response Act
- Qualified family leave wages for which a credit is allowed under section 7003 of the Families First Coronavirus Response Act
- Forgiveness amount can be reduced if employees are not rehired within 30 days of receipt of the PPP funds
- The reduction in forgiveness will be applied if salaries are reduced or wages eliminated
- Documentation (may include but is not limited to)
- Payroll tax filings reported to IRS
- State income, payroll and unemployment insurance filings
- Cancelled checks, payment receipts, transcript of accounts or other documents verifying payment on covered mortgage obligations, payments on covered lease obligations and covered utility payments
Last Updated: April 20, 2020*