Paycheck Protection Program

As of May 21, 2020, the SBA has approved 4.4 million loans totaling nearly $512 billion.

As many of you know, the U.S. Government has signed into law the Cares Act in response to the Covid-19 crisis. The Cares Act includes the Paycheck Protection Program (PPP), which may provide forgivable loans to small businesses to pay their employees during this crisis.

Wood & Huston Bank is an SBA Lender in this program.  See Links below to the latest information available from the SBA.  

If you are a WHB customer and interested in this program, please complete the application and gather the supporting data outlined in the links below and work with your existing Loan Officer. If you are not a current WHB customer, please click here.

Summary Features of the SBA Paycheck Protection Program (PPP)

  1. Interest Rate fixed at 1.00%
  2. 2 Year loan term
  3. No payments for the first 6 months
  4. No fees for Borrower
  5. The loan may be fully or partially forgivable after 8-week compliance period if the requirements are met by the borrower

Summary Paycheck Protection Program Application
Please include the following documentation with your application for the Paycheck Protection Program working with your bookkeeper, CPA or internal financial staff;

  1. SBA Paycheck Protection Application Form
  2. Documentation showing your payroll amount – see below
  3. Most recent years tax returns – see below
  4. Entity Documentation for new customers (Operating Agreement, EIN Number, etc.), Drivers Licenses of all owners of 20% or more
  • Small businesses, sole proprietorships, independent contractors and self-employed individuals can apply for loans to cover their payroll and other certain expenses through existing SBA lenders.

As a lender under delegated authority for the SBA Paycheck Protection Program (“PPP”), Wood & Huston Bank will facilitate small business loans through the Paycheck Protection Program. This program provides potentially forgivable loans to small businesses to pay their employees during the COVID-19 crisis. All loan terms will be the same for everyone.

This program is designed to provide economic support to businesses by offering loans to enable companies to retain employees and pay certain operational expenses incurred during the COVID-19 pandemic.

The PPP eliminates many of the requirements of a typical SBA loan and expands the types of businesses that are eligible for relief. The SBA continues to provide guidance regarding this program. Please check for updates. 

Below is a summary of the criteria for loans under this program.

When can I apply?

Small businesses, sole proprietorships, independent contractors and self-employed individuals can apply for loans to cover their payroll and other certain expenses through existing SBA lenders now through June 30, 2020, or until funds are exhausted.

How can I apply?
Wood & Huston Bank loan officers are accepting applications. Download the applications and related forms below.

Overview from SBA
Borrower Information Fact Sheet from SBA
Application from SBA
Beneficial Ownership
SBA Payroll Calculator
 

What do I need to apply?
You will need to complete the PPP loan application and submit the application with the required documentation before June 30, 2020, or until the funds are exhausted.

 

What other documents will I need to include in my application?
You will need to provide your loan officer with payroll documentation.

 

Start Preparing Now
We recommend you work with your bookkeeper, CPA or internal financial staff to begin collecting the following documentation to support your application:

  • Payroll reports for 2019 and 2020 year-to-date showing the following by employee and/or officers: •Gross wages •Paid time off •Paid vacation •Pay for family medical leave •State and local taxes (form 940, 941 or 944) •1099's for independent contractors (if applicable)
  • Health insurance premiums paid by the employer under a group health plan
  •  Sum of retirement plan funding contributed by the employer (included 401K plans, Simple IRA & SEP IRAs) 

What can I use these loans for?
You should use the proceeds from these loans toward your:

  • Payroll cost, 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.

What counts as payroll costs?
Payroll costs 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 (not federal) assessed on compensation; and
  • 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.

List of payroll documents

How large can my loan be?  

Loans can be for up to two months of your average monthly payroll costs from the last year plus an additional 25% of that amount. That amount is subject to a $10 million cap by SBA. 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.

Who can apply?

All businesses – including nonprofits, veterans’ organizations, Tribal business concerns, sole proprietorships, self-employed individuals, and independent contractors – with 500 or fewer employees can apply.  Some exceptions exist for others.

Business Operations
Covers business operations from 2/15/2020 – 6/30/2020; the loan must be originated by 6/30/2020.  Each applicant must provide evidence the business was in operation prior to 2/15/2020.

Forgiveness

  • The loan can be 100% forgiven if certain qualifications are met
  • Expenditures eligible for forgiveness over an eight-week period:
    • Rent
    • Utilities
    • Interest payments on any mortgage obligations or other debt obligations incurred before February 15, 2020 (but not any payments or prepayments of principal)
    • Payroll costs

How long will this program last?
Although the program is open until June 30, 2020, we encourage you to apply as quickly as you can because there is a funding cap by the Government. 

How many loans can I take out under this program?
Only one.

How much of my loan may be forgiven?
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 8 weeks after getting the loan. Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.

You will also owe money if you do not maintain your staff and payroll.

  • Number of Staff: Your loan forgiveness will be reduced if you decrease your full-time employee headcount.
  • Level of Payroll: Your loan forgiveness will also be reduced if you decrease salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019.
  • Re-Hiring: You have until June 30, 2020, to restore your full-time employment and salary levels for any changes made between February 15, 2020, and April 26, 2020.

How can I request loan forgiveness?
The SBA is developing methods for requesting loan forgiveness. The request will include documents that verify the number of full-time equivalent employees and pay rates, as well as the payments on eligible mortgage, lease and utility obligations. You must certify that the documents are true and that you used the forgiveness amount to keep employees and make eligible mortgage interest, rent and utility payments.

What is my interest rate?
 1.00% fixed rate.

When do I need to start paying interest on my loan? 
All payments are deferred for 6 months; however, interest will continue to accrue over this period.

When is my loan due?
Monthly payments will begin 6 months from origination and include 18 monthly payments to fully pay the loan.

Can I pay my loan earlier than 2 years?
Yes. There are no prepayment penalties or fees.

Do I need to pledge any collateral for these loans?
No. No collateral is required.

Do I need to personally guarantee this loan? 
No. There is no personal guarantee requirement.

However, if the proceeds are used for fraudulent purposes, the U.S. government will pursue criminal charges against you.


What do I need to certify?
As part of your application, you need to certify in good faith that:

  • 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 the PPP program.
  • You will provide your loan officer 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 receiving this loan.
  • Loan forgiveness will be provided for the sum of documented payroll costs, covered mortgage interest 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.
  • All the information you provided in your application and in all supporting documents and forms is true and accurate. Knowingly making a false statement to get a loan under this program is punishable by law.
  • You acknowledge that the loan officer will use the information you provide to 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. And you also understand, acknowledge and agree that the loan officer can share the tax information with the SBA’s authorized representatives, including authorized representatives of the SBA Office of Inspector General, for the purpose of compliance with SBA Loan Program Requirements and all SBA reviews.

Paycheck Protection Program Forgiveness

On May 15, 2020, the Small Business Administration (SBA) posted the application and instructions borrowers should use to seek forgiveness of their SBA Paycheck Protection Program (PPP) loans. Further borrower instructions and guidance for lenders are still to come from the SBA. So, the details are still to follow.

You can find the SBA's release here.

Small Business Administration (SBA), in consultation with the Department of the Treasury, is expected to release additional regulations and further guidance to help businesses to complete the application, Treasury said in a statement.

You can find the Treasury Department's release here.

All participants in the SBA PPP loan program should continue to document their use of funds under the program and follow the evolving guidance on forgiveness. You should follow the SBA and Treasury websites for updates, and we will update our site also as we receive the coming directions from the SBA on how to proceed with this new form and instructions.

Wood & Huston Bank and its subsidiaries are not tax or legal adviors. Please consult your tax or legal advisor for more information regarding your personal situation. We have no such agency relationships with CPAs, tax, or legal advisors.

Date Last Updated: May 23, 2020