The Paycheck Protection Program is specifically designed to help small businesses keep their workforce employed.


Additional updates and provisions were released earlier today 4/3 regarding the Payroll Protection Program, including a finalized application and corresponding regulations:

  • The interest rate on PPP loans was changed from 0.5% to 1%.
  • For businesses with employees, payments to subcontractors normally reported on Form 1099-MISC are excluded from Payroll Costs.
    *(For independent contractors and sole proprietorship’s without employees that are applying for PPP loans, the Payroll Costs used to determine the loan amount are the sole proprietor or independent contractor’s net earnings from self-employment.)
  • Regarding loan forgiveness, 75% of forgivable amount must be used for payroll costs, while up to 25% can be allocated towards other qualified costs like mortgage interest and rent.
  • Wages and benefits paid to employees abroad cannot be included in payroll costs for purposes of determining the loan amount.

The Small Business Administration has already admitted they will likely run out of money to give out, banks are anticipating a delay in funding due to awaiting additional guidance.

Payroll documentation MUST be provided.  Possible source documents could include:

  • Each employee’s W-2 for 2019 and when applicable, Form W-2 C
  • All 4 quarterly-filed Form 941 due to IRS within 30 days following quarter-end
  • Annual IRS Form 940 due to IRS by January 31
  • Each independent contractor’s 1099
  • All 4 quarterly Form 1040-ES for self-employed individuals
  • Also, when the applicant uses a 3rd party tax service, the 2019 YTD detail of payroll paid should be provided.

LIMIT ONE LOAN PER BUSINESS. The loan program provides for a maximum term of 2 years, first 6 months of payments deferred with a .5% fixed. 

Yes, you read that correctly:  one half of one percent.

You can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union,  and Farm Credit System institution that is participating.  You should consult with your local lender as to whether it is participating in the program.

The ABC’s of the available loans?

A. Let’s get the FAQs out of the way:

  • No requirement that business is not able to obtain credit elsewhere
  • Loans are non-recourse – except if the proceeds are used for an unauthorized purpose
  • No personal guarantee required
  • No collateral required
  • Good faith certification required

B. Loan Forgiveness is also reduced if employee salaries and wages are reduced:

  • Forgiveness reduced by the amount of reduction of  salaries or wages of any employee that is in excess of 25%  during the covered period, compared to the most recent full quarter
  • Excludes employees annualized pay in excess of $100,0000.

C. The principal forgiven in an amount equal to the following costs incurred during the covered period (8 weeks):

  • Payroll costs
  • Mortgage interest
  • Rents
  • Utilities

The SBA is anticipating running out of funds within two weeks of the application opening.

Time is of the essence.

SBA loans can be life preservers for your business.

Realizing you need to build lasting life preservers to protect your business, family, and legacy?

Take the first step and schedule a meeting with our CEO.

-The Team on the Ark