Paycheck Protection SBA Guaranteed Program/ Cares Act

Guidelines

Borrower Information:

Complete Application 2483 via SBA- Attached- All applications should be submitted to: OnPath website

Max Amount: 2.5 x Payroll Costs

Rate: 1%

Max Term: 2 years

Last day to apply: June 30, 2020

Only one loan per borrower not per entity

E signatures accepted

1st Payment due 6 months from loan date unless forgiven; interest will accrue daily

OnPath will only be accepting applications from Current Business Account Members in good Standing since February 15, 2020 or earlier

You are eligible if you are:

A small business with fewer than 500 employees

A small business that otherwise meets the SBA’s size standard

A 501(c)(3) with fewer than 500 employees

An individual who operates as a sole proprietor

An individual who operates as an independent contractor

An individual who is self-employed who regularly carries on any trade or business

A Tribal business concern that meets the SBA size standard

A 501(c)(19) Veterans Organization that meets the SBA size standard

Guidelines

In addition, some special rules may make you eligible:

If you are in the accommodation and food services sector (NAICS 72), the 500-employee rule is applied on a per physical location basis

If you are operating as a franchise or receive financial assistance from an approved Small Business Investment Company the normal affiliation rules do not apply

REMEMBER: The 500-employee threshold includes all employees: full-time, part-time, and any other status.

Lenders will Be Looking For: Lenders will also ask you for a good faith certification that:

The uncertainty of current economic conditions makes the loan request necessary to support ongoing operations

The borrower will use the loan proceeds to retain workers and maintain payroll or make mortgage, lease, and utility payments

Borrower does not have an application pending for a loan duplicative of the purpose and amounts applied for here

From Feb. 15, 2020 to Dec. 31, 2020, the borrower has not received a loan duplicative of the purpose and amounts applied for here (Note: There is an opportunity to fold emergency loans made between Jan. 31, 2020 and the date this loan program becomes available into a new loan)

If you are an independent contractor, sole proprietor, or self-employed individual, lenders will also be looking for certain documents (final requirements will be announced by the government) such as payroll tax filings, Forms 1099-MISC, and income and expenses from the sole proprietorship. April 10 is when these applications will be able to be submitted

Guidance

How Much Can I Borrow:

Loans can be up to 2.5x the borrowers average monthly payroll costs, not to exceed $10 Million

INCLUDED Payroll Cost:

For Employers: The sum of payments of any compensation with respect to employees that is a:

salary, wage, commission, or similar compensation;

payment of cash tip or equivalent;

payment for vacation, parental, family, medical, or sick leave

allowance for dismissal or separation

payment required for the provisions of group health care benefits, including insurance premiums

payment of any retirement benefit

payment of state or local tax assessed on the compensation of the employee

Guidance

For Sole Proprietors, Independent Contractors, and Self-Employed Individuals:

The sum of payments of any compensation to or income of a sole proprietor or independent contractor that is a wage, commission, income, net earnings from self-employment, or similar compensation and that is in an amount that is not more than $100,000 in one year, as pro-rated for the covered period.

NON-SEASONAL EMPLOYERS:

Maximum loan = 2.5 x Average total monthly payroll costs incurred during the year prior to the loan date

For businesses not operational in 2019:

2.5 x Average total monthly payroll costs incurred for January and February 2020

SEASONAL EMPLOYERS:

Maximum loan = 2.5 x Average total monthly payments for payroll costs for the 12-week period beginning February 15, 2019 or March 1, 2019 (decided by the loan recipient) and ending June 30, 2019

Guidance

EXCLUDED Payroll Cost:

Compensation of an individual employee in excess of an annual salary of $100,000, as prorated for the period February 15, to June 30, 2020

Payroll taxes, railroad retirement taxes, and income taxes

Any compensation of an employee whose principal place of residence is outside of the United States

Qualified sick leave wages for which a credit is allowed under section 7001 of the Families First Coronavirus Response Act (Public Law 116– 5 127); or qualified family leave wages for which a credit is allowed under section 7003 of the Families First Coronavirus Response Act

Guidance

Payments on utilities (electricity, gas, water, transportation, telephone, or internet)

For borrowers with tipped employees, additional wages paid to those employees

NOTE: The government is now advising that because of high participation, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs. The loan forgiveness cannot exceed the principal

Forgiveness Program:

How Much?

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

Payroll costs (using the same definition of payroll costs used to determine loan eligibility)

Interest on the mortgage obligation incurred in the ordinary course of business

Rent on a leasing agreement

Guidance

How could the forgiveness be reduced?

The amount of loan forgiveness calculated above is reduced if there is a reduction in the number of employees or a reduction of greater than 25% in wages paid to employees. Specifically:

What if I bring back employees or restore wages?

Reductions in employment or wages that occur between February 15, 2020 and April 26, 2020 (as compared to February 15, 2020) shall not reduce the amount of loan forgiveness IF by June 30, 2020 the borrower eliminates the reduction in employees or reduction in wages.

Reduction based on reduction of number of employees:

Guidance

Lender Information:

100% Guaranteed by SBA

SBA will allow lenders to rely on certifications of the borrower in order to determine eligibility of the borrower and use of loan proceeds and to rely on specified documents provided by the borrower to determine qualifying loan amount and eligibility for loan forgiveness

Lender will be held harmless for borrower’s failure to comply with program criteria

Documents to collect:

Payroll processor records

Payroll tax filings

W-3

Income and expenses from Sole Proprietorship

Bank records

Guidance

Ineligible for PPP:

You are engaged in any activity that is illegal under federal, state, or local law;

Household employer (individuals who employ household employees such as nannies or housekeepers

An owner of 20 percent or more of the equity of the applicant is incarcerated, on probation, on parole; presently subject to an indictment, criminal information, arraignment, or other means by which formal criminal charges are brought in any jurisdiction; or has been convicted of a felony within the last five years;

You, or any business owned or controlled by you or any of your owners, has ever obtained a direct or guaranteed loan from SBA or any other Federal agency that is currently delinquent or has defaulted within the last seven years and caused a loss to the government

Qualifying Payroll Costs:

salary, wages, commissions

cash tips or equivalent based on employers’ records

payment for vacation, parental, family, medical, or sick leave;

allowance for separation or dismissal;

payment for the provision of employee benefits consisting of group health care coverage, including insurance premiums, and retirement;

payment of state and local taxes assessed on compensation of employees;

Guidance

Excluded Payroll Costs:

The actual amount of loan forgiveness will depend, in part, on the total amount of payroll costs, payments of interest on mortgage obligations incurred before February 15, 2020, rent payments on leases dated before February 15, 2020, and utility payments under service agreements dated before February 15, 2020, over the eight-week period following the date of the loan. However, not more than 25 percent of the loan forgiveness amount may be attributable to non-payroll costs.

SBA will issue additional guidance on loan forgiveness

FAQ:

Q: Do independent contractors count as employees for purposes of PPP loan forgiveness?

A: No, independent contractors have the ability to apply for a PPP loan on their own, so they do not count for purposes of a borrower’s PPP loan forgiveness.

Q: What happens if PPP loan funds are misused?

A: If you use PPP funds for unauthorized purposes, SBA will direct you to repay those amounts. If you knowingly use the funds for unauthorized purposes, you will be subject to additional liability such as charges for fraud. If one of your shareholders, members, or partners uses PPP funds for unauthorized purposes, SBA will have recourse against the shareholder, member, or partner for the unauthorized use.

FAQ Cont.

Q: What certifications need to be made?

A: On the Paycheck Protection Program application, an authorized representative of the applicant must certify in good faith to all of the below:

The applicant was in operation on February 15, 2020 and had employees for whom it paid salaries and payroll taxes or paid independent contractors, as reported on a Form 1099-MISC.

Current economic uncertainty makes this loan request necessary to support the ongoing operations of the applicant.

The funds will be used to retain workers and maintain payroll or make mortgage interest payments, lease payments, and utility payments; I understand that if the funds are knowingly used for unauthorized purposes, the federal government may hold me legally liable such as for charges of Fraud. Not more than 25% of the proceeds may be used for Non-Payroll use.

Documentation verifying the number of full-time equivalent employees on payroll as well as the dollar amounts of payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities for the eight-week period following this loan will be provided to the lender.

Loan forgiveness will be provided for the sum of documented payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities. As explained above, not more than 25 percent of the forgiven amount may be for non-payroll costs.

During the period beginning on February 15, 2020 and ending on December 31, 2020, the applicant has not and further certify that the information provided in this application and the information provided in all supporting documents and forms is true and accurate in all material respects. I understand that knowingly making a false statement to obtain a guaranteed loan from SBA is punishable under the law, including under 18 USC 1001 and 3571 by imprisonment of not more than five years and/or a fine of up to $250,000; under 15 USC 645 by imprisonment of not more than two years and/or a fine of not more than $5,000; and, if submitted to a federally insured institution, under 18 USC 1014 by imprisonment of not more than thirty years and/or a fine of not more than $1,000,000.

I acknowledge that the lender will confirm the eligible loan amount using tax documents I have submitted. I affirm that these tax documents are identical to those submitted to the Internal Revenue Service. I also understand, acknowledge, and agree that the Lender can share the tax information with 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.

FAQ Cont.

with the borrower’s application Follow applicable BSA requirements:

Federally insured depository institutions and federally insured credit unions should continue to follow their existing 22 BSA protocols when making PPP loans to either new or existing customers who are eligible borrowers under the PPP. PPP loans for existing customers will not require re-verification under applicable BSA requirements, unless otherwise indicated by the institution’s risk-based approach to BSA compliance.

Each Lender Shall: Confirm receipt of borrower certifications

contained in Paycheck Protection Program Application form issued by the Administration;

Confirm receipt of information demonstrating that a borrower had employees for whom the borrower paid salaries and payroll taxes on or around February 15, 2020;

Confirm the dollar amount of average monthly payroll costs for the

preceding calendar year by reviewing the payroll documentation submitted

Cares Act Guidance

Resources to get Started:

Capital to cover the cost of retaining employees? Then the Paycheck Protection Program might be right for you.

• A quick infusion of a smaller amount of cash to cover you right now? You might want to look into an Emergency Economic Injury Grant.

• To ease your fears about keeping up with payments on your current or potential SBA loan? The SmallBusiness Debt Relief Program could help.

• Just some quality, free counseling to help you navigate this uncertain economic time? The resourcepartners might be your best bet

Economic Injury Disaster Loans & Emergency Economic Injury Grants

These grants provide an emergency advance of up to $10,000 to small businesses and private non-profits harmed by COVID-19 within three days of applying for an SBA Economic Injury Disaster Loan (EIDL). To access the advance, you first apply for an EIDL and then request the advance. The advance does not need to be repaid under any circumstance, and may be used to keep employees on payroll, to pay for sick leave, meet increased production costs due to supply chain disruptions, or pay business obligations, including debts, rent and mortgage payments.

Cares Act Guidance

EIDL Grant FAQ:

Guidance

Small Business Tax Provisions

Employee Retention Credit for Employers Subject to Closure or Experiencing Economic Hardship

This provision would provide a refundable payroll tax credit for 50 percent of wages paid by eligible employers to certain employees during the COVID-19 crisis. The credit is available to employers, including non-profits, whose operations have been fully or partially suspended as a result of a government order limiting commerce, travel or group meetings. The credit is also provided to employers who have experienced a greater than 50 percent reduction in quarterly receipts, measured on a year-over-year basis.

Wages of employees who are furloughed or face reduced hours as a result of their employer’s closure or economic hardship are eligible for the credit. For employers with 100 or fewer full-time employees, all employee wages are eligible, regardless of whether an employee is furloughed. The credit is provided for wages and compensation, including health benefits, and is provided for the first $10,000 in wages and compensation paid by the employer to an eligible employee. Wages do not include those taken into account for purposes of the payroll credits for required paid sick leave or required paid family leave, nor for wages taken into account for the employer credit for paid family and medical leave (IRC sec. 45S).

The credit is not available to employers receiving assistance through the Paycheck Protection Program. The credit is provided through December 31, 2020.

Delay of Payment of Employer Payroll Taxes

This provision would allow taxpayers to defer paying the employer portion of certain payroll taxes through the end of 2020, with all 2020 deferred amounts due in two equal installments, one at the end of 2021, the other at the end of 2022. Payroll taxes that can be deferred include the employer portion of FICA taxes, the employer and employee representative portion of Railroad Retirement taxes (that are attributable to the employer FICA rate), and half of SECA tax liability.

• Deferral is not provided to employers receiving assistance through the Paycheck Protection Program.

Cares Act and Employee Rights

The Families First Coronavirus Response Act (FFCRA or Act) requires certain employers to provide their employees with paid sick leave and expanded family and medical leave for specified reasons related to COVID-19.

These provisions will apply from April 1, 2020 through December 31, 2020.

PAID LEAVE ENTITLEMENTS

Generally, employers covered under the Act must provide employees:

Up to two weeks (80 hours, or a part-time employee’s two-week equivalent) of paid sick leave based on the higher of their regular rate of pay, or the applicable state or Federal minimum wage, paid at:

• 100% for qualifying reasons #1-3 below, up to $511 daily and $5,110 total;

• 2/3 for qualifying reasons #4 and 6 below, up to $200 daily and $2,000 total; and

• Up to 12 weeks of paid sick leave and expanded family and medical leave paid at 2/3 for qualifying reason #5 below for up to $200 daily and $12,000 total.

A part-time employee is eligible for leave for the number of hours that the employee is normally scheduled to work over that period.

ELIGIBLE EMPLOYEES

In general, employees of private sector employers with fewer than 500 employees, and certain public sector employers, are eligible for up to two weeks of fully or partially paid sick leave for COVID-19 related reasons (see below). Employees who have been employed for at least 30 days prior to their leave request may be eligible for up to an additional 10 weeks of partially paid expanded family and medical leave for reason #5 below.

QUALIFYING REASONS FOR LEAVE RELATED TO COVID-19

An employee is entitled to take leave related to COVID-19 if the employee is unable to work, including unable to telework, because the employee:

Resources

https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources

https://www.sbc.senate.gov/public/index.cfm/guide-to-the-cares-act

www.beonpath.org Questions?