IMPORTANT ALERT FOR PPP APPLICANTS
COVID-19: DISASTER RELIEF ASSISTANCE
Our nation’s small businesses are facing an unprecedented economic disruption due to the Coronavirus (COVID-19) outbreak. On Friday, March 27, 2020, the President signed into law the CARES Act, which contains $376 billion in relief for American workers and small businesses.
In addition to traditional Small Business Administration (SBA) funding programs, the CARES Act established several new temporary programs to address the COVID-19 outbreak.
While EIDL Loans require direct application with SBA, Freedom has partnered with a trusted third party vendor, Loan Street, to offer Payment Protection Program (PPP) loans to existing Business Banking Members.1
Paycheck Protection Program
This loan program provides loan forgiveness for retaining employees by temporarily expanding the traditional SBA 7(a) loan program. Apply directly with Freedom.
EIDL Loan Advance
This loan advance will provide up to $10,000 of economic relief to businesses that are currently experiencing temporary difficulties. Apply directly with SBA.
SBA Express Bridge Loans
Enables small businesses who currently have a business relationship with an SBA Express Lender to access up to $25,000 quickly.
SBA Debt Relief
The SBA is providing a financial reprieve to small businesses during the COVID-19 pandemic.
Paycheck Protection Program
This program is available to Freedom business members
who established a business membership on or before February 15, 2020.
How to Apply
Freedom has partnered with Loan Street, an outside third party vendor to accept applications and supporting documents as well as service these loans.
Funding for the SBA’s Payment Protection Program has been re-established as of 4/27/20.
This application is ONLY available to Freedom business members who established a business membership with Freedom on or before February 15, 2020.
- Was in operation on 2/15/2020 AND
- Had employees for whom it paid salaries and payroll taxes OR paid independent contractors (reported on a Form 1099 MISC)
This program is for any small business with less than 500 employees (including sole proprietorships, independent contractors and self-employed persons), 501(c)(3) non-profit organizations, 501(c)(19) veterans organizations, or Tribal businesses (see sec. 31(b)(2)(C) of the Small Business Act) affected by coronavirus/COVID-19.
Businesses in certain industries may have more than 500 employees if they meet the SBA’s size standards for those industries.
Small businesses in the hospitality and food industry with more than one location could also be eligible if their individual locations employ less than 500 workers.
- Loans can be for up to 2 months of your average monthly payroll costs from the last year plus an additional 25% of that amount. The amount is subject to a $10 million cap.
- If you are a seasonal or new business, you will use different applicable time periods for your calculation. Payroll costs will be capped at $100,000 annualized for each employee.
Required documents depend on a variety of factors. Freedom has assembled Documentation Guidelines. All submitted documents will be subject to SBA review and approval.
- For purposes of calculating average monthly payroll, most applicants will use the average monthly payroll for 2019, excluding costs over $100,000 on an annualized basis for each employee.
- For seasonal businesses, the applicant may elect to instead use average monthly payroll for the time period between February 15, 2019 and June 20, 2019, excluding costs over$100,000 on an annualized basis for each employee.
- For new businesses, average monthly payroll may be calculated using the time period from January 1, 2020 to February 29, 2020, excluding costs over $100,000 on an annualized basis for each employee.
The Small Business Administration (SBA), in consultation with the Department of the Treasury,
is providing this guidance to assist businesses in calculating their payroll costs for purposes of
determining the amount of a Paycheck Protection Program (PPP) loan businesses can apply for.
Borrowers and lenders may rely on the guidance provided in this document as SBA’s
interpretation of the CARES Act and of the Paycheck Protection Program Interim Final Rules.
The U.S. government will not challenge lender PPP actions that conform to this guidance1 and to
the PPP Interim Final Rules and any subsequent rulemaking in effect at the time.
(not all will be eligible for forgiveness)
- Payroll costs, including benefits
- Interest on mortgage obligations, incurred before February 15, 2020
- Rent, under lease agreements in force before February 15, 2020
- Utilities, for which service began before February 15, 2020
- 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 of independent contractor: wages, commissions, income, or net earnings from self-employment, capped at $100,000 annualized for each employee.
- If a borrower received an EIDL loan between January 31, 2020 and the date on which PPP loans are made available, and if the EIDL loan was for a different purpose than PPP loans, then a borrower may likely also receive a PPP loan.
- It is still unclear if a borrower could receive an EIDL loan after the date on which PPP loans are made available if for different purposes and trade industry representative has requested clarification.
Please Refer to SBA’s Loan Forgiveness Resource Page for full details (Released Saturday, May 16, 2020).
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.
- It is anticipated that not more than 25% of the forgiven amount may be used for non-payroll costs.
- Borrowers will also owe money if they do not maintain staff and payroll.
- Number of staff: Loan forgiveness will be reduced if a business decreases full-time employee headcount.
- Level of payroll: Loan forgiveness will also be reduced if a business decreases salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019.
- Re-hiring: Businesses have until June 30, 2020 to restore full-time employment and salary levels for any changes made between February 15, 2020 and April 26, 2020.
The loan forgiveness form and instructions include several measures to reduce compliance burdens and simplify the process for borrowers, including:
- Options for borrowers to calculate payroll costs using an “alternative payroll covered period” that aligns with borrowers’ regular payroll cycles
- Flexibility to include eligible payroll and non-payroll expenses paid or incurred during the eight-week period after receiving their PPP loan
- Step-by-step instructions on how to perform the calculations required by the CARES Act to confirm eligibility for loan forgiveness
- Borrower-friendly implementation of statutory exemptions from loan forgiveness reduction based on rehiring by June 30
- Addition of a new exemption from the loan forgiveness reduction for borrowers who have made a good-faith, written offer to rehire workers that was declined
- Borrowers will owe money when the loan is due if they use the loan amount for anything other than payroll costs, mortgage interest, rent, and utilities payments over the 8 weeks after getting the loan.
The business will submit a request to the lender that is servicing the loan. The request will include documents:
- That verify the number of full-time equivalent employees and pay rates
- Eligible payments on mortgage (interest) or lease obligations
- Eligible utility obligations
- Applicant must certify that the documents are true and that the forgiveness amount is used to keep employees and make other eligible payments. The lender is required to make a decision on forgiveness within 60 days.
- Borrower must provide documentation to the lender to support the forgiveness request including (forgiveness may be approved without the required documentation)
- Documentation supporting verifying the number of full time equivalent employees on payroll and pay rates for the periods specified
- Payroll tax filings reported to IRS and State income, payroll and unemployment insurance filings
- Cancelled checks, payment receipts, transcripts of accounts or other documents verifying payments on covered mortgage obligations, payments on covered lease obligations and covered utility payments
- Current economic uncertainty makes the loan necessary to support ongoing operations.
- The funds will be used to retain workers and maintain payroll or to make mortgage, lease and utility payments.
- Applicant has not and will not receive another loan under this program.
- Applicant will provide to lender documentation that verifies the number of full-time equivalent employees on payroll and the dollar amounts of payroll costs, covered mortgage payments, covered rent payments, and covered utilities for the 8 weeks after getting this loan.
- Loan forgiveness will be provided for the sum of documented payroll costs, covered mortgage payments, covered rent payments, and covered utilities. Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.
The US Department of the Treasury has assembled a page of additional resources for borrowers about the PPP.
*APR = Annual Percentage Rate
1 This program is available to Freedom business members who established a business membership on or before February 15, 2020.
2 Loan Forgiveness and required documentation are subject to review and approval by the Small Business Administration (SBA).