The SBA Paycheck Protection Loan Program
The SBA discontinued accepting applications for this program on 8/8/2000.
If your business was a recipient of an SBA PPP loan through United Bank, guidance has been released with directions for the forgiveness process. Learn more.
UPDATE as of 4/24/20: President Trump has signed another relief bill into law, providing additional funds for the Paycheck Protection Program.
On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law. As part of this nearly $2.2 trillion aid package to fight the COVID-19 (Coronavirus) pandemic, Congress appropriated approximately $349 billion for the creation of the Paycheck Protection Program (PPP). This program provides payroll assistance for the nation’s nearly 30 million small businesses, and select nonprofits, in the form of 100% guaranteed loans from the U.S. Small Business Administration (SBA).
Below is a summary of the PPP and its impact on borrowers.
Borrowers are broadly eligible if they have 500 or fewer employees, or are certain businesses that meet SBA size standards. Additionally, 501(c)(3) nonprofits, 501(c)(19) veterans organizations, and certain tribal concerns qualify for PPP loans. Borrowers may also be sole proprietors, independent contractors, or self-employed. Borrowers must have been in operation on February 15, 2020, and employed either salaried employees subject to payroll taxes or paid independent contractors.
Further, borrowers must certify they meet the criteria above, were impacted by current economic uncertainty, and they will use the funds for allowable uses defined in ‘Loan Terms’ below. Borrowers must also provide the relevant documentation as part of this certification. Finally, borrowers must certify the information they provide is accurate.
UPDATE: The PPPFA signed into law on 6/5/20 changed the forgivable expenses to be at least 60% payroll costs. This change will help more borrowers obtain full loan forgiveness.
These first-come, first-serve loans are offered until August 8, 2020, or until the program runs out of funds. Loans are capped at the lesser of 250% of a borrower’s average monthly payroll costs, or $10 million. Payroll costs include, but are not limited to, salary, paid leave, medical, and healthcare. Further, salary for employees making more than $100,000 is capped at that level for the calculation of loan size. All loans have a 1% interest rate and a two-year term. Loans are 100% guaranteed by the SBA, and electronic signatures or electronic consents may be used. Loan payments may be deferred for up to 6 months.
PPP loans may be used to pay for payroll costs, mortgage interest obligations, rent obligations, utilities, and any other interest payment on debt obligations accrued before February 15, 2020. SBA requires 75% of the loan to be used for payroll costs, while the remaining 25% can be used for the other expenses. Funds used for purposes other than those outlined above must be repaid by the borrower.
SBA will not collect any fees from either the borrower or the lender.
On June 5, 2020, the Paycheck Protection Program Flexibility Act (PPPFA) became law. Below are some highlights regarding how the PPPFA affects your PPP loan.
- Borrowers may choose to apply for forgiveness of qualifying expenses incurred during a 24-week “covered period” after their loan was disbursed. The previous law limited forgiveness to expenses incurred during the eight weeks following loan disbursement. Borrowers may still apply for forgiveness pursuant to the eight-week covered period, unless they applied on or after June 5.
- The deferral period, during which no payments of principal or interest are required, has been extended to the earlier of (a) the date when United Bank receives payment of the loan forgiveness amount from the Small Business Administration (SBA), or (b) ten months after the end of the “covered period.” The previous law required a six-month deferral period. This change means that if you promptly submit a forgiveness application, you will not be required to begin repaying your loan until the forgiveness process is completed.
- Forgivable expenses must consist of at least 60% payroll costs (the previous law required that at least 75% of the requested forgiveness amount consist of payroll costs). This change should help more borrowers obtain full loan forgiveness.
- The PPPFA did not change the maturity date of existing loans. Those loans will continue to have a two-year maturity.
Learn more about the Forgiveness Application process.
United Bank’s Involvement in the PPPUnited Bank is an approved SBA lender and is now accepting loan applications for the program.
Customers may inquire directly with a lender to begin the process, or contact us by sending an email with the following information to firstname.lastname@example.org:
- Your name and your business name
- Industry or type of business
- City where your business is located
- How should we contact you? Email or phone (please provide number and best time to call)
One of our lenders will contact you to discuss the CARES program further. The PPP Application will be forwarded to you at that time with instructions for uploading all documents securely, so that the exchange of your private personal information will be encrypted and secured.
For supplemental information, visit the U.S. Department of Treasury to read more.