SBA info from Senator Blunt's Staff

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April 1, 2020

The Small Business Administration (SBA) has released additional information about the Paycheck Protection Program, including a Sample Application Form that businesses/employers can review. This is the larger relief package to help cover payroll, utilities and rent/mortgage for small businesses, independent contractors, 501(c)3 nonprofits, and the self-employed. As soon as we have the approved, final application form I will send it out.  According to the SBA, lenders can start processing loan applications as soon as Friday, April 3.

If you have applied for an Economic Injury Disaster Loan, you can also apply for the Paycheck Protection Program. However, if you receive the $10,000 EIDL loan and then are approved for the Paycheck Protection Program, the amount received from the EIDL program will be subtracted from the total PPP amount approved.

The IRS also provides a good Question/Answer sheet for Employers here: https://www.irs.gov/newsroom/faqs-employee-retention-credit-under-the-cares-act

Paycheck Protection Program info: https://www.sba.gov/funding-programs/loans/paycheck-protection-program-ppp

Sample Paycheck Protection Program form: https://www.sba.gov/sites/default/files/2020-03/Borrower%20Paycheck%20Protection%20Program%20Application_0.pdf

Below is a good explanation of the Paycheck Protection Program from the US Chamber:

What’s In It For Me?

There are several loan programs for businesses of all sizes through the SBA, but the most important one for small businesses is the Paycheck Protection Program. It’s a loan — that essentially converts into a grant if business owners follow all the requirements — for businesses with fewer than 500 employees. Its purpose is to help businesses maintain their headcount during this period of disruption. Congress allocated more than $350 billion for the program, or roughly the amount to cover payroll for all small businesses for six weeks.

·       Details: Interest is to be no more than 4% and the amount applicants receive is based on a calculation of average monthly payroll cost multiplied by 2.5, to cover two and a half months of payroll (including healthcare costs and paid sick leave). The maximum loan amount a business owner can receive is $10 million.

·       What if I had to let employees go already? You won’t be penalized if you plan to bring them back.  When you apply for the loan, you’ll be able to base your payroll calculation on your total employees. If you use the loan to bring them back, and they stay with you, you are eligible for full loan forgiveness.

 

Who is Eligible?

Small businesses with fewer than 500 employees that would normally qualify for loans from the Small Business Administration (SBA). Plus, this loan program expands eligibility to 501 c3 nonprofits with fewer than 500 employees, certain veterans organizations, sole proprietors, the self-employed, and individual contractors (1099 workers). There is also expanded eligibility for small businesses in the hospitality and food industry with more than one location – these businesses can be eligible at the store and location level if the store employs less than 500 workers.

 

What Should a Small Business Owner Do Right Now?

Have a plan. Just because your business may be eligible for a loan, does not mean that’s the best decision for your business. Weigh the pros and cons. If you know you can’t meet the requirements needed to get the loan forgiven, evaluate the risk of debt. Find the right loan for you, research it’s qualifications, and get your paperwork ready.

What Paperwork? SBA has simplified the process, but at minimum, business owners need to pull together average monthly payroll costs before going to a lender.

 

When Will I Get My Loan?

Typically, it can be cumbersome to receive a loan through SBA, but previous barriers have been removed. Plus, the government is approving as many lenders as possible hoping that:

Lots of Lenders + Reducing Paperwork = Money to Businesses Quickly.

What Are Some Caveats? 

·       Make sure you can meet the requirements to have your loan forgiven. Be aware that if you reduce the number of employees after loan origination, you may get a reduced dollar amount in loan forgiveness.

·       If you are considering laying off employees or furloughing employees, be sure to look obstacles with health insurance plans. Every employer should be talking with their broker to understand if a plan allows for temporary furlough.

Lesley Rone
Field Staff
Senator Roy Blunt
573-979-6836


 
 
Kennett Chamber of Commerce
P.O. Box 61 • 1601 First Street • Kennett, MO 63857
573.888.5828 • Fax: 573.888.9802
Email: info@kennettmo.com
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