Paycheck Protection Program
We are no longer accepting PPP Loan applications.
The Paycheck Protection Program provides loans to encourage certain qualified small businesses to retain employees through the COVID-19 pandemic and includes loan forgiveness subject to certain conditions.
In reviewing applicable affiliation rules to determine eligibility, all borrowers must assess their economic need for a PPP loan under the standard established by the CARES Act and the PPP regulations. As a borrower, you must certify in good faith that your PPP loan request is necessary. To further ensure PPP loans are limited to eligible borrowers in need, the SBA has decided, in consultation with the Department of the Treasury, that it will review all loans in excess of $2 million, in addition to other loans as appropriate.
Borrower will need to apply to have the loan forgiven. In order for the loan to be forgiven, all employees must be kept on the payroll for 24-weeks and at least 60% of the loan funds must have been used to cover payroll costs. Any amount that is not forgiven will convert to a loan that must be repaid by the borrower.
WHAT CAN FUNDS BE USED FOR?
- The loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities (at least 60% of the forgiven amount must have been used for payroll). Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees.
- Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.
- Loans issued prior to June 5 have a maturity of 2 years. Loans issued after June 5 have a maturity of 5 years. All loans have an interest rate of 1%.
- Payroll costs are capped at $100,000 on an annualized basis for each employee. Due to likely high subscription, it is anticipated that not more than 40% of the forgiven amount may be for non-payroll costs.
- You will owe money when your loan is due if you use the loan amount for anything other than payroll costs, mortgage interest, rent, and utilities payments over the 24 weeks after getting the loan. You will also owe money if you do not maintain your staff and payroll.
Loan Details and Forgiveness
Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.
The PPP Flexibility Act was signed into law on June 5th, providing more time to qualify for forgiveness and greater flexibility for Paycheck Protection Program borrowers. The Small Business Administration and US Treasury will issue guidance and rules, along with a modified loan forgiveness application. The forgiveness application isn’t due until 24 weeks from when your PPP loan was credited to your CSB deposit account.
We are working on implementing a digital solution to assist with your forgiveness application process; we suggest that you hold off on taking any action; and we will be in contact and will share more when we have further details and guidance from the Small Business Administration (SBA).
Please simply reference the PPP Forgiveness Application (Form 3508) as a resource to familiarize yourself with the application.
June 18, 2020, the Small Business Administration released a three-page “EZ” Paycheck Protection Program loan forgiveness application requiring less documentation and fewer calculations than previously required. Form 3508EZ applies to borrowers who meet any one of these three criteria:
- Applied for the PPP loan as self-employed, an independent contractor or a sole proprietor with no employees.
- Did not reduce salary or wages for any employee by more than 25%, and did not reduce the number or hours of their employees (excepting laid-off employees who refused an offer to return).
- Did not reduce salary or wages for any employee by more than 25% during the covered period and experienced reductions in business activity as a result of health directives related to COVID-19.
The streamlined forgiveness form is expected to smooth the forgiveness application process for a substantial portion of PPP borrowers. SBA also updated the regular Form 3508 to reflect recent changes made by Congress in the PPP Flexibility Act and issued a new interim final rule that implements changes made by the PPPFA.
FOR ADDITIONAL SMALL BUSINESS PROGRAMS, GUIDANCE, AND LOAN RESOURCES, PLEASE VISIT THE SBA'S WEBSITE.