Paycheck Protection Program (P3) Loans
The Payroll Protection Program is a Federal Program to help small businesses impacted by Coronavirus/COVID-19 continue to pay their employees. It allows small businesses to get a loan to cover payroll and other qualifying expenses. Business Impact NW is a participating lender in this program. We are accepting applications from any small business, not just our current lending clients.
To get help with preparing your application and support materials, we have classes, services and business coaches available. The best place to start is here. Attend our Navigating COVID-19 Assistance Webinar to get the latest information on COVID-19 economic relief programs. In this webinar, we will cover basic eligibility, use of funds, and how to apply for the following programs: EIDL, P3, SBA Debt Relief, Tax Provisions, and more.
Ready to start your application and need help?
Business Impact NW is currently processing applications as quickly as possible, though the volume of loan applications is very high. We will process your application and respond as soon as we can.
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What is the Paycheck Protection Program?
The Paycheck Protection Program is part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. This is a program intended to provide American small businesses with eight weeks of cash-flow assistance through 100 percent federally guaranteed loans.
- All small businesses are eligible
- The loan has a maturity rate of 5 years and an interest rate of 1%
- No need to make loan payments for 16 months
- No collateral or personal guarantees required
- No fees
- The loan covers expenses for 24 weeks starting from the loan origination date (if the obligations began before February 15, 2020)
- The loan can be forgiven and essentially turn into a non-taxable grant
Do you qualify for the program?
Likely yes! This program is more extensive than the SBA disaster loan. Small businesses, sole proprietorships, independent contractors, and self-employed individuals can all qualify.
- Sole proprietorships will need to submit schedules from their tax return filed (or to be filed) showing income and expenses from the sole proprietorship.
- Independent contractors will need to submit Schedule C.
- Self-employed individuals will need to submit payroll tax filings reported to the Internal Revenue Service.
What can you use the funds for?
60 percent of the PPP loan is supposed to be used to fund payroll and employee benefits costs.
The remaining 40 percent can be spent on:
- Mortgage interest payments
- Rent and lease payments
If you stick to these guidelines, you’ll be able to have 100% of the loan forgiven (effectively turning it into a tax-free grant).
Tip: Create a new, separate bank account to hold the funding so it’s easier to keep track of these expenses when you’re preparing to apply for loan forgiveness.
What counts as “payroll costs”?
Payroll costs under the PPP program include:
- Salary, wages, commissions, or tips (capped at $100,000 on an annualized basis for each employee)
- Employee benefits including costs for vacation, parental, family, medical, or sick leave allowance for separation or dismissal; payments required for the provisions of group health care benefits including insurance premiums; and payment of any retirement benefit
- State and local taxes assessed on compensation
- For a sole proprietor or independent contractor: wages, commissions, income, or net earnings from self-employment, capped at $100,000 on an annualized basis for each employee.
In other words, most payroll costs are covered. However, the following scenarios are not covered:
- Payments made to independent contractors
- S corps and C corps owners who aren’t on payroll (shareholders distributions don’t count as payroll under this program)
How much funding can I receive?
The maximum amount you can receive from Business Impact NW is your monthly average payroll cost in 2019, multiplied by 2.5, up to a maximum of $10 million.
If you are a seasonal employer, the monthly average cost will be calculated differently. We will use a 12-week period beginning either February 15, 2019 or March 1, 2019, and ending June 30, 2019.
If your business did not exist before June 30, 2019, we will look at your costs in January and February 2020.
How do you apply?
The SBA itself doesn’t lend you the money, they just “back” the loan that the lender provides. You will get the loan directly from Business Impact NW or other SBA-approved lenders offering the loan.
You are encouraged to apply early as there is a funding cap for this program. Deadline to apply is August 5th with all documents submitted.
As part of your application, you’ll be asked to verify:
- Current economic uncertainty makes the loan necessary to support your ongoing operations.
- The funds will be used to retain workers and maintain payroll or to make mortgage, lease, and utility payments.
- You have not and will not receive another loan under this program.
- You will provide Business Impact NW with documentation that verifies the number of full-time equivalent employees on payroll and the dollar amounts of payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities for the eight weeks after getting this loan.
- You acknowledge that Business Impact NW will calculate the eligible loan amount using the tax documents you submitted. You affirm that the tax documents are identical to those you submitted to the IRS.
Financial documentation you’ll need
You’ll need to provide payroll/bookkeeping records to prove your payroll expenses.
That could include:
- 3rd party payroll processor
- Payroll tax filings
- Payroll tax forms from 2019 (Forms 941, 940 and W-3)
- Schedule C
- Income and expenses from a sole proprietorship
If you don’t have access to those kinds of documents, you can also provide bank records.
How can I get my loan forgiven?
In the 24 Weeks following your loan signing date, all expenses related to the following can be forgiven:
- Payroll—salary, wage, vacation, parental, family, medical, or sick leave, health benefits
- Mortgage interest—as long as the mortgage was signed before February 15, 2020
- Rent—as long as the lease agreement was in effect before February 15, 2020
- Utilities—as long as service began before February 15, 2020
You’ll need to keep your records and have accurate bookkeeping to prove your expenses during the loan period. You will also need to have spent 60% of loan on payroll in order to qualify for loan forgiveness. There will be a loan forgiveness application available for your use.
Business Impact NW must make a decision within 60 days of your forgiveness application submission.