Our team of top professionals is ready to assist your small business(es) in applying for and securing these forgivable loans through the SBA. Call us today at 717-914-6579.
The “Paycheck Protection Program,” is an emergency lending facility, administered by the Small Business Administration (SBA), to provide small business loans through Banks on favorable terms to borrowers impacted by the current state of economic uncertainty. Providing $349 billion in new lending capacity, it accounts for a majority of the small business assistance provided in the CARES Act. Congress intended the Paycheck Protection Program to accomplish two fundamental goals: (1) help small businesses cover their near-term operating expenses during the worst of the crisis, and (2) provide a strong incentive for employers to retain their employees.
Paycheck Protection Program FAQs
Where can I apply for the Paycheck Protection Program?
You can apply for the Paycheck Protection Program (PPP) through Mid Penn Bank. We have developed a comprehensive application that is available for download here. We will be happy to help you with completing any areas of this application where you require assistance. Please call us at 717-914-6579.
Who is eligible for the loan?
You are eligible for a loan if you are a small business that employs 500 employees or fewer, or if your business is in an industry that has an employee-based size standard through SBA that is higher than 500 employees. In addition, if you are a restaurant, hotel, or a business that falls within the North American Industry Classification System (NAICS) code 72, “Accommodation and Food Services,” and each of your locations has 500 employees or fewer, you are eligible. Tribal businesses, 501(c)(19) veteran organizations, and 501(c)(3) nonprofits, including religious organizations, will be eligible for the program. Nonprofit organizations are subject to SBA’s affiliation standards. Independently owned franchises with under 500 employees, who are approved by SBA, are also eligible. Eligible franchises can be found through SBA’s Franchise Directory.
I am an independent contractor or gig economy worker, am I eligible?
Yes. Sole proprietors, independent contractors, gig economy workers, and self-employed individuals are all eligible for the Paycheck Protection Program.
What is the maximum amount I can borrow?
The amount any small business is eligible to borrow is limited to 250 percent of their average monthly payroll expenses, up to a total of $10 million. This amount is intended to cover 8 weeks of payroll expenses and any additional amounts for making payments towards debt obligations.
Seasonal businesses, Independent Contractors and those that are self-employed need to follow the SBA’s Guidance for calculating the maximum loan amount.
Mid Penn Bank recommends that all applicants review the SBA Guidance on How to Calculate Loan Amounts prior to completing their PPP Loan Application.
How can I use the money such that the loan will be forgiven?
The amount of principal that may be forgiven is equal to the sum of expenses for payroll, and existing interest payments on mortgages, rent payments, leases, fixed debt payments, and utilities. Payroll costs include employee salaries (up to an annual rate of pay of $100,000), hourly wages and cash tips, paid sick or medical leave, and group health insurance premiums. If you would like to use the Paycheck Protection Program for other working capital needs and business-related expenses, like inventory, you can, but that portion of the loan will not be forgiven.
When is the loan forgiven?
The loan is forgiven at the end of the 8-week period after you take out the loan. You will work with us to verify and document covered expenses and the proper amount of forgiveness.
What is the covered period of the loan?
The covered period during which expenses can be forgiven extends from February 15, 2020 to June 30, 2020. You can choose which 8 weeks should count towards the covered period, which can start as early as February 15, 2020.
How much of my loan will be forgiven?
The purpose of the Paycheck Protection Program is to help you retain your employees, at their current base pay. If you keep all of your employees, the entirety of the loan will be forgiven. If you still lay off employees, the forgiveness will be reduced by the percent decrease in the number of employees. If your total payroll expenses on workers making less than $100,000 annually decreases by more than 25 percent, loan forgiveness will be reduced by the same amount. If you have already laid off some employees, you can still be forgiven for the full amount of your payroll cost if you rehire your employees by June 30, 2020. Follow this link to the US Chamber of Commerce to read more about the forgiveness calculation.
Am I responsible for interest on the forgiven loan amount? Will it hurt my credit score?
No, if the full principal of the PPP loan is forgiven, you are not responsible for the interest accrued in the 8-week covered period. The remainder of the loan that is not forgiven will operate according to the loan terms outlined in your loan agreement. Your credit score will not be impacted.
What are the interest rate and terms for the loan amount that is not forgiven?
The terms of the loan not forgiven may differ on a case-by-case basis. However, the maximum terms of the loan feature a 2-year term with interest capped at 1.0 percent and a 100 percent loan guarantee by the SBA. You will not have to pay any fees on the loan, and collateral requirements and personal guarantees are waived. Loan payments will be deferred for at least six months and up to one year starting at the origination of the loan.
When is the application deadline for the Paycheck Protection Program?
You are eligible to apply for the PPP loan until June 30th, 2020.
I took out a bridge loan through my state, am I eligible to apply for the Paycheck Protection Program?
Yes, you can take out a state bridge loan and still be eligible for the PPP loan.
If I have applied for, or received an Economic Injury Disaster Loan (EIDL) related to COVID-19 before the Paycheck Protection Program became available, will I be able to refinance into a PPP loan?
Yes. If you received an EIDL loan related to COVID-19 between January 31, 2020 and the date at which the PPP becomes available, you would be able to refinance the EIDL into the PPP for loan forgiveness purposes. However, you may not take out an EIDL and a PPP for the same purposes. Remaining portions of the EIDL, for purposes other than those laid out in loan forgiveness terms for a PPP loan, would remain a loan. If you took advantage of an emergency EIDL grant award of up to $10,000, that amount would be subtracted from the amount forgiven under PPP.
Source: US Senate Committee on Small Business and Entrepreneurship