Paycheck Protection Program

The US Small Business Association, with support from the Department of Treasury, has implemented the Paycheck Protection Program (“PPP”), authorizing up to $349 billion in forgivable loans to small businesses to pay their employees during the COVID-19 crisis.

The program provides small businesses with funds to pay up to 8 weeks of payroll costs including benefits. Funds can also be used to pay interest on mortgages, rent, and utilities. 

Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. The amount forgiven will be reduced if full-time headcount declines, or if salaries and wages decrease.

Please note:  Information is subject to change as it becomes available from the SBA. Please continue to refer to this page for updates. Our application process is listed below.

Eligibility

  • Your business was in operation prior to February 15, 2020 and had employees for whom you paid salaries and payroll taxes.
  • Eligible for small businesses with 500 or fewer employees, including nonprofits, veterans organizations, tribal concerns, self-employed individuals, sole proprietorships, and independent contractors.
    • Businesses with more than 500 employees in the food services and accommodations industries (NAICS starting with 72) are eligible. 

Use of Proceeds

  • Funds are provided in the form of loans that will be forgiven when used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll). 

Loan Terms, Rates & Fees

  • Loan Amount: Loans can be for up to 2.5 times your average monthly payroll costs from the last year. That amount is subject to a $10 million cap. Payroll costs are capped at $100,000 on an annualized basis for each employee.
    • It may also include the outstanding amount of an Economic Injury Disaster Loan (EIDL) made between January 31, 2020 and April 3, 2020, less the amount of any “advance” under an EIDL COVID-19 loan (because it does not have to be repaid).
    • Learn how to calculate your loan amount, organized by business type, with this guide from U.S. Treasury
  • Interest Rate: 1% fixed rate
  • Forgivable Amount: Loan amounts will be forgiven as long as proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs over the 8 week period after the loan is made; and employee and compensation levels are maintained. 
    • Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs. 
    • You will owe money if you do not maintain your staff and payroll, or if you decrease salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019.
    • You will have eight weeks from the date of the first loan disbursement to fully restore your employment levels and payroll costs to in order to receive forgiveness of the full loan amount. 
    • PPP Borrowers can click here to download the PPP Loan Forgiveness Application from the U.S. Treasury website.
  • Collateral: No collateral is required. 
  • Guarantees: There is no personal guarantee requirement. 
  • Fees: There are no fees associated with PPP loans.
  • Term: All loans are due in two years, with no prepayment penalties or fees. 
  • Payment Deferral Period: No payments due for the first six months.

For more detailed information, visit the SBA PPP website. The U.S. Treasury Department CARES Act page has also provided a Frequently Asked Questions (FAQ) document

 

Application Process

Applications are now being accepted. To apply, please download the .zip package using the button at the top of this page and complete all three documents. It includes the following: 

  1. VEDA PPP checklist (PDF): A list of documents needed with your application. 
  2. PPP Application (PDF): A completed SBA application.
  3. VEDA PPP Worksheet (MS Excel): To calculate your maximum PPP loan amount and your estimated forgivable amount.

Send completed applications to your loan officer. If you are not a VEDA borrower, please send completed applications to ppp@veda.org.

Program ends June 30, 2020 but applicants are encouraged to apply as soon as possible. If you have questions and need to speak to a loan officer, please fill out our Contact Us form or call (802) 828-5627.