What is The PPP Loan? SBA Stimulus Forgivable Loan

What is the forgivable SBA loan?

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What is the Paycheck Protection Program (“PPP”)
- Establishes $350 Billion for the provision of loans to small business
- New type of SBA Section 7(a) loans
- For loans made between February 20, 2020 and June 30, 2020
- Only available to qualifying "small" employers
- Up to 100% of the loan amount is eligible for forgiveness
Who can apply for the Paycheck Protection Program (“PPP”)
-Anyone who meets the SBA's definition of a "small business concern"
-Has no more than 500 employees per location
-NAICS code begins with 72

What are the Requirements for the Paycheck Protection Program PPP
- In businesses before February 15, 2020
- Had employees or independent contractors
- Make a “good faith” certification of the following:
1. The uncertainty of current economic conditions makes the loan request
necessary to support ongoing operations
2. The borrower will use the loan proceeds to retain workers and maintain
payroll or make mortgage, lease, and utility payments
3. Borrower does not have an application pending for a loan duplicative of the
purpose and amounts applied for here, nor have they received a duplicative
loan since February 15. Note that previous SBA loans may be refinanced
using a PPP loan.
- Must apply by June 30, 2020

Paycheck Protection Loan Details
- Maximum loan amount is lesser of (a) 2.5 times the average monthly payroll (based on 12-month lookback) or (b) $10 million
- Loans will be 100% guaranteed by the SBA
- Availability of credit from other sources does not disqualify eligibility
- No application fees or closing costs
- Nonrecourse; no collateral or personal guarantees imposed
- Maximum interest rate is 4%
- Maximum loan term of 10 years
- First 6 months of payments (principal and interest) are automatically deferred;
deferral can extend up to a year
- Up to 100% of the PPP loan can be forgiven

What is the Maximum Loan From the Paycheck Protection Program
- 2.5 times average total monthly payments of “payroll costs” during the 1-year period
before date the loan is made.

What Payrolls Costs are Included in the Paycheck Protection Program
- Wages
- Tips
- Vacation and sick pay
- Group health benefits
- Severance
- Retirement benefits
- State and local taxes on employee compensation

How Does PPP Paycheck Protection Program Loan Forgiveness Work
- Forgiveness equal to amount of qualifying expenses incurred in the first 8-week
period after origination of the PPP loan.
- “Qualifying expenses” include:
Payroll costs (defined earlier)
Rent payments
Mortgage interest (no principal payments)
Utility payments (electricity, gas, water, transportation, telephone, or internet
access)
- Forgiven amounts are not taxable to the small business (i.e., a tax-free grant)
- Forgiven amounts are interest free

PPP Limits on Loan Forgiveness
- Loan forgiveness is reduced proportionately to the reduction in employee headcount during the COVID-19 crisis.
- Loan forgiveness is reduced dollar-for-dollar by decreases in an employee’s compensation greater than 25% from prior quarters

How To Apply For a PPP Paycheck Protection Loan
Visit: https://www.sba.gov/document/sba-form--paycheck-protection-program-ppp-sample-application-form

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Disclaimer
This presentation does not constitute legal or tax advice. It is provided solely for informational and educational
purposes and does not fully address the complexity of the issues or all the steps businesses must take under
applicable laws. You should consult your professional advisers regarding your individual situation. BBSI
undertakes no obligation to update the information in this presentation, and no representations are made that
the content is error-free.

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