Guide to New Paycheck Protection Loan Program
Small businesses and sole proprietorships can apply for Small Business Administration (SBA) loans under the Paycheck Protection Program beginning Friday, April 3, 2020, through existing SBA lenders. Independent contractors and self-employed individuals will be able to apply for loans beginning Friday, April 10, 2020, alsothrough existing SBA lenders.
The best way to find an existing SBA lender is to contact your local financial institution, including credit unions, today to learn if they will be participating. Participating SBA lenders will also be able to give exact details about how they will accept and process applications. You also can contact your SBA regional office to find participating lenders in your area.
Currently, the application is available here. You can complete it in advance to have all the necessary information and documentation ready to submit to your local SBA lender. The Bank Secrecy Act requirements still apply for the lender verification of the borrower’s eligibility. Borrowers should have tax documents and other relevant materials prepared to submit with their application to verify this information.
To apply for a Paycheck Protection Program loan, business owners must certify in good faith that the current economic crisis makes the loan necessary to support ongoing operations and the funds will be used to retain workers and maintain payroll. The loan proceeds must go toward eligible businesses expenses, primarily included payroll costs, to be forgiven.
The U.S. Treasury Department is requiring lenders to verify the following information:
- The borrower was in operation on Feb. 15, 2020;
- The borrower had employees for whom the borrower paid salaries and payroll taxes; and
- The dollar amount of average monthly payroll costs.
Borrowers will not be charged a fee to apply for the loan. The federal government will guarantee all Paycheck Protection Program loans, and the borrower will not be asked for collateral for the loan.
These loans are standardized with the same terms for all borrowers. The loan proceeds must go toward eligible business expenses, primarily payroll costs over the eight-week period after the loan is issued. Also, employers must maintain employee and compensation levels, or rehire terminated employees, for the loan to be forgiven.Because of the expected high enrollment in this program, Treasury anticipates that not more than 25 percent of the forgiven amount may be for non-payroll costs.
For more information from PIA, including eligibility requirements, the loan terms, and what qualifies as a payroll expense, please see the FAQ on SBA Paycheck Protection Program loans. This resource will be updated continually for members.