As mandatory closures continue to leave businesses struggling across the country, resources and relief programs are becoming available to assist with emergency funding. If your business has been impacted by the coronavirus (COVID -19) we’d like to share the following information. Expand each tab for more.
SBA Online Tool: Do you qualify as a small business for government contracting purposes?
The SBA has an online tool that can help determine if your business is considered "Small."
Paycheck Protection Program (PPP)
First National Bank is a SBA Certified approved lender. Please contact your local branch during regular business hours if we can be of any assistance.
Section 7(a) Paycheck Protection Loan - (Section 1102 of the Act)
The Paycheck Protection Loan is a modified and expanded SBA 7(a) loan program for businesses that are currently struggling due to uncertainty in the markets caused by the coronavirus (COVID-19) pandemic.
What types of businesses and entities are eligible for a PPP loan?
- Businesses and entities must have been in operation on February 15, 2020.
- Small business concerns, as well as any business concern, a 501(c)(3) nonprofit organization, a 501(c)(19) veterans organization, or Tribal business concern described in section 31(b)(2)(C) 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.
- Individuals who operate a sole proprietorship or as an independent contractor and eligible self-employed individuals.
- Any business concern that employs not more than 500 employees per physical location of the business concern and that is assigned a NAICS code beginning with 72, for which the affiliation rules are waived.
- Affiliation rules are also waived for any business concern operating as a franchise that is assigned a franchise identifier code by the Administration, and company that receives funding through a Small Business Investment Company.
How is the loan size determined?
Depending on your business’s situation, the loan size will be calculated in different ways (see below). The maximum loan amount is $10 million.
- If you were in business February 15, 2019 – June 30, 2019: Your maximum loan is equal to 250 percent of your average monthly payroll costs during that time period. If your business employs seasonal workers, you can opt to choose March 1, 2019 as your time period start date.
- If you were not in business between February 15, 2019 – June 30, 2019: Your max loan is equal to 250 percent of your average monthly payroll costs between January 1, 2020 and February 29, 2020.
What costs are eligible for payroll?
- Compensation (salary, wage, commission, or similar compensation, payment of cash tip or equivalent)
- Payment for vacation, parental, family, medical, or sick leave
- Allowance for dismissal or separation
- Payment required for the provisions of group health care benefits, including insurance premiums
- Payment of any retirement benefit
- Payment of State or local tax assessed on the compensation of employees
What costs are not eligible for payroll?
- Employee/owner compensation over $100,000
- Taxes imposed or withheld under chapters 21, 22, and 24 of the IRS code
- Compensation of employees whose principal place of residence is outside of the U.S.
- Qualified sick and family leave for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act
What are allowable uses of loan proceeds?
- Payroll costs (as noted above)
- Costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums
- Employee salaries, commissions, or similar compensations (see exclusions above)
- Payments of interest on any mortgage obligation (which shall not include any prepayment of or payment of principal on a mortgage obligation)
- Rent (including rent under a lease agreement)
- Interest on any other debt obligations that were incurred before the covered period
What are the loan term, interest rate, and fees?
For any amounts not forgiven, the maximum term is 10 years, the maximum interest rate is 4 percent, zero loan fees, zero prepayment fee (SBA will establish application fees caps for lenders that charge).
How is the forgiveness amount calculated?
Forgiveness on a covered loan is equal to the sum of the following payroll costs incurred during the covered 8 week period compared to the previous year or time period, proportionate to maintaining employees and wages (excluding compensation over $100,000):
- Payroll costs plus any payment of interest on any covered mortgage obligation (not including any prepayment or payment of principal on a covered mortgage obligation) plus any payment on any covered rent obligation plus any covered utility payment.
How do I get forgiveness on my PPP loan?
You must apply through your lender for forgiveness on your loan. In this application, you must include:
- Documentation verifying the number of employees on payroll and pay rates, including IRS payroll tax filings and State income, payroll and unemployment insurance filings.
- Documentation verifying payments on covered mortgage obligations, lease obligations, and utilities.
- Certification from a representative of your business or organization that is authorized to certify that the documentation provided is true and that the amount that is being forgiven was used in accordance with the program’s guidelines for use.
What happens after the forgiveness period?
Any loan amounts not forgiven are carried forward as an ongoing loan with a maximum term of 10 years, at a maximum interest rate of 4 percent. Principal and interest will continue to be deferred, for a total of 6 months to a year after disbursement of the loan. The clock does not start again.
Can I get more than one PPP loan?
No, an entity is limited to one PPP loan. Each loan will be registered under a Taxpayer Identification Number at SBA to prevent multiple loans to the same entity.
How does the PPP loan coordinate with SBA’s existing loans?
Borrowers may apply for PPP loans and other SBA financial assistance, including Economic Injury Disaster Loans (EIDLs), 7(a) loans, 504 loans, and microloans, and also receive investment capital from Small Business Investment Corporations (SBICs). However, you cannot use your PPP loan for the same purpose as your other SBA loan(s). For example, if you use your PPP to cover payroll for the 8-week covered period, you cannot use a different SBA loan product for payroll for those same costs in that period, although you could use it for payroll not during that period or for different workers.
How does the PPP loan work with the temporary Emergency Economic Injury Grants and the Small Business Debt Relief program?
Emergency Economic Injury Grant and Economic Injury Disaster Loan (EIDL) recipients and those who receive loan payment relief through the Small Business Debt Relief Program may apply for and take out a PPP loan as long as there is no duplication in the uses of funds. Refer to those sections for more information.
When is the deadline to get a Paycheck Protection Loan?
All loans under the CARES Act must be disbursed by no later than June 30, 2020.
To learn more, you may visit: https://www.sba.gov/funding-programs/loans/paycheck-protection-program
U.S. Small Business Administration (SBA) - Economic Injury Disaster Loan
The Economic Injury Disaster Loan is a low-interest federal loan issued by the SBA to alleviate economic injury small businesses or private non-profits are experiencing; in this case, injury caused by the Coronavirus (COVID19). They become available once a county or state gets an Economic Injury Disaster Loan assistance declaration also issued by the SBA.
Low-interest federal disaster loans are currently available for businesses in every state and can be used to cover accounts payable, debts, payroll and other bills the coronavirus has affected your ability to pay.
How to Apply:
The SBA highly recommends using the online loan application, which can be found at: https://www.sba.gov/funding-programs/disaster-assistance
When does the business have to start paying back the loan?
EIDLs repayment is deferred for twelve months. Interest accrues during this period. Further, SBA offers loans with long-term repayments to keep payments affordable, up to a maximum of 30 years. Terms are determined on a case-by-case basis, based upon each borrower’s ability to repay.
What is The Process?
The loan process can be found HERE.
For assistance with your application, you can call the SBA Disaster Assistance Customer Service Center at 1-800-659-2955 or email firstname.lastname@example.org for more information on SBA disaster assistance.
First National Bank is an SBA approved lender. Please contact your local branch during regular business hours if we can be of any assistance.
SBA - Express Bridge Loan Pilot Program
In response to the COVID-19 National Emergency, the SBA Express Bridge Loan (EBL) Pilot Program has been modified and the term extended. The EBL Pilot Program is designed to supplement the Agency’s direct disaster loan capabilities and authorizes SBA Express Lenders to provide expedited SBA-guaranteed bridge loan financing on an emergency basis in amounts up to $25,000 for disaster-related purposes to small businesses located in communities affected by Presidentially-declared disasters while those small businesses apply for and await long-term financing (including through SBA’s direct Economic Injury Disaster Loan Program, if eligible).
The general eligibility requirements for the EBL are as follows:
- For small businesses with an existing banking relationship with SBA Express lenders as of the date of the disaster.
- Effective March 25, 2020, SBA expanded program eligibility to include small businesses nationwide adversely impacted under the Coronavirus Disease (COVID-19) Emergency Declaration issued by President Trump on March 13, 2020 (“COVID-19 Emergency Declaration”).
- EBL loans can only be made by SBA Express Lenders that had a valid Supplemental Loan Guaranty Agreement SBA Express Program in effect as of the date of the applicable disaster;
- EBL loans can only be made up to six months after the date of an applicable Presidential Disaster Declaration, however for the COVID-19 Emergency Declaration, EBL loans can be approved through March 13, 2021.
- The Lender must have an existing banking relationship with the EBL applicant as of the date of the applicable disaster in order to help mitigate the risks associated with the streamlined underwriting process under the EBL Pilot Program.
- The small business must have been operational when the declared disaster commenced and must meet all other 7(a) loan eligibility requirements (credit elsewhere, size, etc.)
For more information: Express Bridge Loan Pilot Program PROGRAM GUIDE