COVID-19 CARES Act
Small Business Administration
Paycheck Protection Program

The CARES Act (Coronavirus Aid, Relief and Economic Security Act) was signed into law on Friday, March 27th.  This Act provides up to $2 Trillion Dollars of aid that is in the form of various programs including:

• Direct Payments of $1,200 or more to individuals, couples and families
• Extended unemployment benefits
• Delay of payroll tax payments
• Utilization of Retirement Funds without early withdrawal penalty
• Special funding for Large Employers and Healthcare Providers
• State and Local Government aid
• A $350 Billion SBA loan program to cover payroll, rent and utilities

The last item in the above list, known as the Paycheck Protection Program (PPP), is an SBA program that will be designed to streamline the normal loan process and get funding into small businesses as quickly as possible.  These loans will be handled through individual banks that are approved SBA lenders.  First Peoples Bank is working diligently to become an approved lender for this program.

The Bank, as well as all small businesses across the nation, are awaiting the details of the PPP, which will provide some much-needed relief for small businesses in our community.  While the details of the program are still being put together by the SBA, the most attractive part of this funding is that some or all of the loan may be forgiven in full should the borrower (small business) meet all of the requirements (which have yet to be announced).

Please know that there is much discussion in the media and online about this program, and with these unprecedented times, anxiety levels among business owners is high.  The Bank has already received dozens of phone calls and emails from business owners looking to apply and “get in the front of the line”.

As of today, the SBA has not released the PPP application nor confirmed what documentation is needed to apply.  The SBA has 15 days to release the details to the banks.

Below are some of the anticipated highlights within the proposed PPP:

• There is no cost to apply
• No collateral or personal guaranty of owners will be required
• Funding is meant to help retain employees, maintain payroll, cover rent, mortgage, insurance and utility expenses
• The loan is expected to cover expenses dating back to February 15, 2020 and up to June 30, 2020, with a formula utilizing the past 12 months payroll information

What can a small business be doing now to be ready to complete the application once it is available?

• PAYROLL– Please calculate your itemized company payroll for 2019 and year-to-date 2020.  It appears there may be a limit per employee or officer of $100,000 annual, so pay special attention to the itemized amounts per employee.  Include contract labor where you filed a 1099 in lieu of payroll.  Be sure to gather appropriate back up from your payroll provider.

• LOAN AND MORTGAGE PAYMENTS – Please itemize all the payments your Company paid on loans and mortgages for business purposes in 2019 and year-to-date 2020.  It is unclear at this time if only mortgage payments will qualify and/or if only interest on these payments will qualify.  Be prepared either way.  For those that have a separate Real Estate holding company that your business occupies, it appears this cost will be captured in the category below but will be defined by the actual program.

• LEASE PAYMENTS – Please itemize all of the rent payments your Company made in 2019 and year-to-date 2020.  Copies of all leases may also be required.

• UTILITIES AND INSURANCE – Please itemize all of the payments your Company made for utilities and insurance premiums in 2019 and year-to-date 2020.

• HEALTHCARE – Please itemize all of the payments your Company made for group healthcare premiums in 2019 and year-to-date 2020.

• RETIREMENT – Please itemize all of the payments your Company made for retirement plans in 2019 and year-to-date 2020.

If you have an interest in applying for this special program, please send an email to SBAContact@fpbank.org so that we may reach out to you as soon as the application and process is finalized.  In the meantime, please gather your supporting documents above to ensure you are ready once the program is activated.

Above all else, we hope you and your family are safe and healthy.