Loan Eligibility, Terms, Usage, and Forgiveness
Maximum loan size is up to 2.5 times average monthly payroll costs over the prior 12 months for most businesses, or over a more targeted period for seasonal businesses, but may not exceed $10 million.
For most businesses, average monthly payroll costs will be based on the full 2019 calendar year or another consecutive period of twelve months ending in January, February, or March 2020. Your monthly payroll includes wages, tips, group health, retirement benefits and employer-paid taxes, but excludes the amount of compensation to individuals in excess of $100,000 and compensation paid to independent contractors.
Seasonal businesses may use average monthly payroll costs for the period between February 15, 2019, or March 1, 2019, and June 30, 2019. Recently established businesses may use average monthly payroll costs for the period from January 1, 2020 through February 29, 2020 if they were not in operation for a full twelve months.
- Employer contributions to defined-benefit or defined-contribution retirement plans
- Payment for the provision of employee benefits consisting of group health care coverage, including insurance premiums
- Payment of state and local taxes assessed on compensation of employees.
All or a portion of the loan and accrued interest may be forgiven.
The amount of forgiveness is calculated as the sum of amounts paid in the eight weeks following loan origination for payroll, mortgage interest, rent, and utilities. The portion of forgiveness that can come from non-payroll expenses is limited to 25% of the total forgiven amount.
- Borrowers cannot apply for both an Economic Injury Disaster Loan (EIDL) and a PPP loan
- Note, if a borrower received an EIDL between January 31, 2020 and April 3, 2020 it does NOT impact their ability to apply for a PPP loan.
- If an EIDL loan received between January 31, 2020 and April 3, 2020 was used for payroll costs, your PPP loan must be used to refinance your EIDL loan (and the amount of the PPP loan is increased by the outstanding EIDL, subject to the $10mm cap).It’s critical for you to weigh all options available to you to ensure the best financial decision for your business. To apply for an EIDL, you must apply directly through the Small Business Administration.
Application Process and Workflow
- For contractors or self-employed:
- Schedule C of 2019 1040 form (a 2018 form will not be accepted)
- Invoice / Bank Statements / Book of record for fiscal year 2019
- Invoice / Bank Statements / Book of record for through Feb 15, 2020
- Form 941 (for persons and entities with 1099 employees)
- For any other type of entity:
- TIN document
- Voided check
- Business existence confirmation
- Payroll processor records
- Payroll tax filings
- EIDL documentation (if applicable)
- Utility bill, not more than two months old, issued to the applicant
- Cancelled check (not more than two months old) with both name and address imprinted
- Deed, mortgage, monthly mortgage statement, or residential rental/lease agreement
- U.S. Postal Service change of address confirmation form or postmarked U.S. mail with forwarding address label (must display the applicant’s full name)
- Receipt for personal property taxes or real estate taxes paid within the last year
- Current automobile or life insurance bill (cards or policies are not accepted)
- Original monthly bank statement not more than two months old issued by a bank