Small Business Administration Paycheck Protection Program Overview 

Is My Business Eligible to Apply?

Eligibility to apply*:

• Your Business has < 500 employees (full-time, part-time or other basis)
• Your business was in operation as of February 15^th, 2020
• You do not have a loan application pending with the SBA for an Economic Injury Disaster Loan
• You have not received an Economic Injury Disaster Loan after February 15^th, 2020 that is duplicative in amount or usage

If you can attest to the affirmative on the above four items, your business is eligible to apply*

Additional Considerations:

• Sole proprietors, independent contractors and other self-employed individuals are eligible to apply
• Tribal Business, 501(c)(19) veteran organizations, and 501(c)(3) nonprofits, including religious organizations with fewer than 500 employees will also be eligible for the program. Nonprofit organizations are subject to SBA’s affiliation standards.

My Business Employs > 500 employees, what options are available to me?

• Businesses that are assigned a North American Industry Classification System (“NAICS”) code 72 are eligible so long as they do not employ > 500 employees per physical location
  • Major industries under this code include (but not limited to)
    • Hotels
    • Restaurants
    • Bars
  • Franchises may be eligible to apply if the individual Franchisee employs < 500 employees (or < 500 per physical location if they fall under NAICS code 72)
  • Additional industries may be eligible if they have > 500 employees, per SBAs Size Standard Chart which may be found at https://www.sba.gov/size-standards/; such as but not limited to:
    • Mining
    • Oil and gas extraction
    • Manufacturing
    • Publishing
    • Textile mills
    • Transportation

*Subject to final regulations forthcoming from the United States Small Business Administration

 How will the Paycheck Protection Program (“PPP”) Loan Amount be Calculated?*

 Step 1 – Calculate your eligible payroll costs:

Combine the following figures from the one-year period prior to the date of application for the PPP

• Salary, wage, commission or similar commissions
• Payments of cash tips of equivalent
• Payment for vacation, parental, family, medical or sick leave
• Allowance for dismissal or separation
• Payments required for the provisions of group health care benefits, including insurance premiums
• Payment of any retirement benefit
• Payment of State or local tax assess on the compensation of employees
• Sum of any payments to an independent contractor that is not more than $100,000

Subtract out the following figures from the one-year period prior to the application

• Any amount of compensation above $100,000 to one single employee
• Compensation to an employee whose principal place of residence is outside of the US
• Sick leave or family leave already covered under Families First Conornavirus Response Act

Step 2 – Take the sum of the above calculation, average it out on a monthly basis, and multiply the average monthly eligible payroll amount by 2.5x and take the lesser of:

• The above sum or;
• $10,000,000

 *Subject to final regulations forthcoming from the United States Small Business Administration

 How do I Calculate the Amount of my Paycheck Protection Program (“PPP”) Loan Forgiveness?*

 A borrower of a PPP loan is eligible for forgiveness equal to the amount the borrower spent on the following items during the 8-week period beginning on the date of the origination:

• Payroll cost including tipped employees
• Interest on mortgage obligations of the business
• Rent on a leasing agreement
• Payment on utilities (electricity, gas, water, transportation, telephone or internet)

Reduction in PPP Loan Forgiveness:

-The amount of forgiveness of the PPP Loan is reduced if there is a reduction in (a) employee workforce or (b) reduction of salary to employees by more than 25%

• If the average monthly full-time equivalent employees of the borrower during the 8-week period from the date of the PPP Loan origination is less than the average monthly full-time employees of the borrower during, at the election of the borrower (i) the period from February 15^th, 2019 to June 15^th, 2019, or (ii) the period beginning of January 1^st, 2020 and ending on February 29^th, 2020, then the amount of PPP Loan forgiveness is reduced by a percentage equal to 100% minus (x) the average monthly full-time equivalent employees of the borrower during the 8-week period from the date of the PPP loan origination divided by (y) the number of average monthly full-time equivalent employees under (i) or (ii) as applicable. CARES Act Section 1106(d)(2). Note that there are alternative calculations for seasonal employers.
• If the borrower reduces the total salary or wages of any employee with wages or salary during any period in 2019 with annualized salary of $100k by more than 25%, then the amount of forgiveness of the PPP Loan will be reduced by the amount of the salary reduction in excess of 25% for employees with annualized salary during 2019 or less than $100K. CARES Act Section 1106(d)(3).

*Subject to final regulations forthcoming from the United States Small Business Administration