Initial funds designated for the the federal CARES Act's Paycheck Protection Program (PPP) have been depleted, but the program is likely to receive additional funds and re-open soon, so now is the time to prepare your application! View responses to some frequently asked questions about the PPP.
The newly enacted federal Coronavirus Aid, Relief, and Economic Security (CARES) Act establishes a Paycheck Protection Program (PPP) that will provide $349 billion in low-interest loans for companies and nonprofits with fewer than 500 employees—a portion of which can be forgiven if the organization meets certain criteria, such as retaining workers. Applicants must verify that the loan is needed to continue operations during the pandemic. Here are some additional details:
- Program details: Provides working capital assistance to small employers who maintain their payroll during this emergency. If the employer maintains its payroll, then the portion of the loan used for covered payroll costs would be forgiven. (To be clear: The payroll portion of the loan would not be forgiven if you lay off or furlough employees.)
- Effective date: Retroactive to February 15, 2020 to help bring workers who might have already been laid off back onto payrolls.
- Loan size: Equal to 250 percent (or 2.5 times) of an employer’s average monthly payroll expense and capped at $10 million.
- Qualified expenses: Payroll, mortgage or rent, and utilities (it is anticipated that no more than 25 percent of the forgiven amount will be able to go to non-payroll costs).
- Covered payroll costs: Salaries and wages (up to an annual rate of pay of $100,000 per employee).
- Loan terms: Interest rate of 0.5 percent
- Maturity of two years
- First payment deferred for six months
- 100 percent guarantee by the Small Business Administration
- No collateral
- No personal guarantees
- No borrower or lender fees payable to the Small Business Administration
Here are step-by-step instructions for how to apply for a PPP loan:
- Contact your administrative/leadership council chair.
- Inform them of this opportunity and ask them to assist you with gathering information.
- Ask your leadership chair to contact the administrative board/leadership council to approve this loan application electronically (by e-mail).
- Contact your local bank to see if they are an approved Small Business Administration (SBA) lender.
- Ensure your 2019 and first quarter 2020 financial statements and payroll records are up-to-date.
- Determine who you have paid a W-2 or 1099 between January 1, 2019 and March 31, 2020.
- Collect the following information: Your staff and administrative board chair can help you with this:
- 2019 payroll—including the last 12 months of payroll.
- List of all 2019 employees—copies of W-2s and 1099s for January 1, 2019 to March 31, 2020 employees and independent contractors that would otherwise be an employee of your business (note: Do NOT include 1099s for services, only for employees).
- Housing allowances should be included in payroll costs.
- Highly compensated individuals who earn more than $100,000 must be included and will be compensated no more than $100,000.
- Healthcare costs—all health insurance premiums paid by the business owner under a group health plan.
- Retirement—your company retirement plan funding paid for by the company.
- Most recent mortgage statement or rent statement (lease).
- Most recent utility bills (electric, gas, phone, Internet, water).
- Interest paid on other debt obligations incurred before February 15, 2020.
If your church is interested in applying for a loan, do it as quickly as possible to increase the likelihood that you will receive a loan before the allocated funds run out. If you have questions about the loans or application process, contact one of these two individuals: