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US may add more funding to PPP; SBA advice and links

April 8. Since the launch of the SBA Paycheck Protection Program on Friday, April 3,  3,299 banks and other SBA-approved lenders have processed 265,000 applications totaling $71 billion.

“Bankers are working as fast as humanly possible to meet the overwhelming demand,” said NC Bankers Association CEO Peter Gwaltney.

For a list of participating North Carolina lenders, click here. Local independent banks include Uwharrie and Aquesta.

The application is here.

Small businesses can visit www.sba.gov to learn more about the Paycheck Protection Program and gather information before applying for a PPP loan with their primary bank.

If your bank is not a participant in the Paycheck Protection Program, inquire with other lenders.

Paycheck Protection Program guidelines

The CARES Act includes $349 billion for a federal small business loan program called the Paycheck Protection Program (PPP). The program is designed to get cash in the hands of small businesses quickly, and incentivize business owners to keep employees on payroll by offering them loan forgiveness. This loan provides small businesses with funds to pay up to 8 weeks of payroll costs including benefits. SBA will fully forgive the loan if all employees are retained and if 75% of more of the money is used on payroll.

Who can apply?

In order to be eligible, you must be a small business (500 employees or less). Starting April 3, small businesses and sole proprietors can access this program. Starting April 10, independent contractors and self-employed individuals can apply. Some nonprofits also qualify.

How can the loan be used?

For payroll (including benefits), interest on mortgage, rent and utilities.

How much of the loan will be forgiven?

In order to be fully forgiven, you must retain all employees. In addition, 75% of more of the loan must be used on payroll. If you are unable to retain all employees, you will be required to repay a portion of the loan.

What are the loan terms?

Interest rate is 1%. All payments are deferred for six months, though interest will continue to accrue during this period. Any portion of the loan that is not forgiven will need to be repaid within 2 years. You do not need to pledge any collateral to receive this loan.

How to apply?

This program is available through participating SBA lenders. Be sure to connect with your lender to determine if there are other forms and documentation you need to fill out and submit.

What materials will you need to apply?
Reach out to a participating lender and gather the necessary documentation such as payroll and payroll tax records for the last year, as well as documentation of income and expenses for sole proprietors. If this is not available, you must provide supporting documentation such as bank records to demonstrate payroll amount.

Calculate your maximum borrow level:
Step 1: Aggregate payroll costs from the last twelve months for employees whose principal place of residence is the United States.
Step 2: Subtract any compensation paid to an employee in excess of annual salary of $100,000
Step 3: Calculate 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.
Step 5: Add the outstanding amount of an Economic Injury Disaster Loan (EIDL) made between January 31, 2020 and April 3, 2020, less the amount of any “advance” under an EIDL COVID-19 loan (because it does not have to be repaid).

More funding may be coming

The $349 billion appropriated by Congress for the program is expected to run out, although leaders on both sides of the aisle in the US Senate may announce additional funding for the Paycheck Protection Program, possibly as early as Thursday.

According to Senate Small Business Committee Chairman Marco Rubio, an additional $200 billion to $250 billion in funding is needed, the NC Bankers Association said.