The Paycheck Protection Program is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. The program is administered by the Small Business Administration (SBA). SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities.

An additional option is the Economic Injury Disaster Loan Program (EIDL). This is a direct LINK to the SBA information page for that program. Applications are direct with the SBA not through a bank.

Small and medium-sized businesses with 500 or fewer employees, including sole proprietors, self-employed individuals and independent contractors. Tribal business concerns meeting the SBA’s published guidelines, as well as 501(c)(3) non-profits and 501(c)(19) veteran’s organizations also qualify. Businesses with more than 500 employees are also eligible in certain industries, including hotel and food service.

Business loans can be up to two months of your average monthly payroll costs from the last year, plus an additional 25% of that amount, not to exceed $10 million. Loans will have a fixed 1.0% rate for all businesses, with no payments for the first 6 months and a 2-year term.

The maximum loan amount is established using the following calculations:

Step 1: Total payroll costs as defined below from February 15, 2019 to February 15, 2020 for employees whose principal place of residence is the United States;

Step 2: Subtract any compensation paid to any employee in excess of an annual salary of $100,000;

Step 3: Calculate the average monthly payroll costs (divide the amount from Step 2 by 12);

Step 4: Multiply the average monthly payroll costs from Step 3 by 2.5

Payroll Costs Include:

A. Compensation to employees located in the U.S. in the form of salary, wages, commissions or similar compensation

B. Cash tips or the equivalent based on your records or best estimate

C. Payment for vacation, parental, family, medical, or sick leave

D. Allowance for separation or dismissal

E. Payment for the provision of employee benefits consisting of group

PPP Loans can be used for payroll, rent, utilities and mortgage interest payments, interest on any other business debt obligation incurred before 2/15/2020 and refinancing an Economic Injury Disaster Loan obtained between 1/31/2020 and 4/3/2020.

To be fully forgiven, you must use 75% of the loan proceed for payroll expenses. You will need to provide documentation verifying the use of the loan funds at the time you request forgiveness.

Forgiveness requests may be submitted 60 days after funding assuming all proceeds have been spent on eligible expenses.

Monthly payroll records from February 2019 – 2020 that might be required, such as:

• Payroll tax filings reported to IRS
• Payroll Summary Report
• Breakdown of payroll benefits if not included in payroll report (vacation, allowance for dismissal, group healthcare benefits, retirement benefits, etc.)
• Other information that your lender may require

Starting April 3, 2020, some banks started accepting PPP applications. Even today, not all eligible banks are accepting applications, but should be able to shortly. It is not required that you go through your home bank, though it may be a smoother process. Either way, Lumen Network can help you prep for either your home bank or help you find a different lender. Also, starting April 10, independent contractors and self-employed individuals can apply. We encourage you to apply sooner rather than later.

• Interest Rate: no more than 1%
• No Fees
• 2 Year Term
• High Likelihood of forgiveness (If employers maintain their payroll, then the loans would be forgiven)*