Paycheck Protection Program (PPP) Loans

The Paycheck Protection Program ended on August 8th, 2020. Liberty SBF will continue to accept applications in hopes that Congress extends the program.

PPP Loan Forgiveness Update.

Paycheck Protection Program loans may be forgiven in full depending on use of funds and eligibility. The loan may be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities during the covered period following the funding of the loan. Please note at least 60% of the forgiven amount must have been used for payroll. Here, we have put together a list of resources to help Liberty’s PPP borrowers get organized around loan forgiveness.

Low Interest Rate

1% fixed rate APR for the life of the loan

Payment Deferral

Payments deferred for 6 months

Loan Forgiveness

Loans may be forgiven if funds used for qualified uses like payroll, mortgage interest, rent, and utilities

Paycheck Protection Program (PPP) Loans

Qualifying for a PPP is easy and more small businesses will qualify for the Coronavirus relief loans than previous SBA loans. First answer two simple questions:

  • My business (or nonprofit) was in operation as of February 15, 2020
  • I am an independent contractor or sole proprietor, or a business/organization has employees or independent contractors with associated payroll costs

If this sounds like your business, take the next step.

Uses of Paycheck Protection Program Loan Funds

Businesses and private nonprofits can use the money to maintain payroll and continue necessary payroll-related payments like rent and utilities. Full uses of the loan include:

  • Salaries, wages, commissions (or similar compensation), cash tip payments (or equivalent)
  • Costs to continue group healthcare benefits, including insurance premiums
  • Mortgage interest payments (not mortgage principal)
  • Rent
  • Utilities
  • Interest on any other debt obligations incurred before February 15, 2020

How Paycheck Protection Program Loans Are Calculated

PPP loans are calculated based on 2.5 times monthly payroll costs. Payroll costs include compensation as outlined above along with other payroll-related costs like retirement payments, state and local taxes on payroll, payment for vacation or paid leave, group healthcare costs, and allowances for separation or dismissal.

Are SBA PPP Loans the Same as Disaster Loans?

PPP loans are different from Economic Injury and Disaster Loans (EIDLs).

EIDLs can be available for small businesses in designated areas (designated as all US states and territories) that have suffered economically due to the COVID-19 pandemic. EIDLloans are more stringent and must be repaid in full. (unlike PPP loans, which are potentially forgivable.)

Do You Have to Prove Economic Injury?

You do not have to prove economic injury with a PPP loan. They are not tied directly to economic losses suffered as a result of the disaster and presumes you have experienced economic distress because of COVID-19.

Paycheck Protection Program Forgiveness

Up to 100% of the loan principal of a PPP loan is potentially forgivable. Eligibility for loan forgiveness is outlined below.

Costs and Payments Eligible for Forgiveness

The below costs and payments incurred within the first 8 weeks of the loan origination date are eligible for forgiveness:

  • Payroll costs
  • Mortgage interest payments (excluding principal)
  • Rent
  • Utilities

Calculating Your PPP Loan Forgiveness

No more than 25% of the forgiven amount can be for non-payroll costs (mortgage interest, rent, and utilities). If your business has laid off employees, that will also affect how much your loan can be forgiven.

When Do I Start Paying Back My PPP Loan?

Payments are deferred for the first 6 months.

Can You Get a PPP Loan If You Have Other Loans?

Yes. Even if you have other SBA loans you can still apply for a PPP loan. You cannot use the funds from PPP loans and other loans for duplicate use – ex. paying rent with PPP loan funds and funds from another loan.

Learn More…

by Ling Han, Director, Credit

by Jackie Rivas, Sales Manager

by Ling Han, Director, Credit

The Paycheck Protection Program ended on August 8th, 2020. Liberty SBF will continue to accept applications in hopes that Congress extends the program.