Frequently asked questions

  • Starting April 3, 2020, small businesses and sole proprietorships can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders.
  • Starting April 10, 2020, independent contractors and self-employed individuals can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders.
  • Other regulated lenders will be available to make these loans as soon as they are approved and enrolled in the program.

Where can I apply?
You can apply through any existing SBA lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. You should consult with your local lender as to whether it is participating. Visit www.sba.gov for a list of SBA lenders.


Who can apply?
All businesses – including nonprofits, veterans organizations, Tribal business concerns, sole proprietorship's, self-employed individuals, and independent contractors – with 500 or fewer employees can apply. Businesses in certain industries can have more than 500 employees if they meet applicable SBA employee-based size standards for those industries.
For this program, the SBA’s affiliation standards are waived for small businesses (1) in the hotel and food services industries; or (2) that are franchises in the SBA’s Franchise Directory; or (3) that receive financial assistance from small business investment companies licensed by the SBA. Additional guidance may be released as appropriate.


What do I need to apply?
You will need to complete the Paycheck Protection Program loan application and submit the application with the required documentation to an approved lender that is available to process your application by June 30, 2020.


What other documents will I need to include in my application?
You will need to provide your lender with payroll documentation.


Do I need to first look for other funds before applying to this program?
No. The SBA is waiving the usual requirement that you try to obtain some or all of the loan funds from other sources (i.e., waiving the Credit Elsewhere requirement).


How long will this program last?
Although the program is open until June 30, 2020, we encourage you to apply as quickly as you can because there is a funding cap and lenders need time to process your loan.


How many loans can I take out under this program?
Only one.


What can I use these loans for?
You should use the proceeds from these loans on your:

  • Payroll costs, including benefits;
  • Interest on mortgage obligations, incurred before February 15, 2020;
  • Rent, under lease agreements in force before February 15, 2020; and
  • Utilities, for which service began before February 15, 2020.

What counts as payroll costs?
Payroll costs include:

  • Salary, wages, commissions, or tips (capped at $100,000 on an annualized basis for each employee);
  • Employee benefits including costs for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal; payments required for the provisions of group health care benefits including insurance premiums; and payment of any retirement benefit;
  • State and local taxes assessed on compensation; and
  • For a sole proprietor or independent contractor: wages, commissions, income, or net earnings from self-employment, capped at $100,000 on an annualized basis for each employee.

There's an exclusion for employees earning more than $100,000. Does this mean that their salary is excluded entirely, or simply capped at $100,000?
It means that for the purpose of calculating your loan, their salary is capped at $100,000. if you have an employee earning a salary of $150,000, for example, the size of your maximum loan will be calculated using a salary of $100,000 for that employee.


Does the PPP cover paid sick leave?
Yes, the PPP covers payroll costs, which include employee benefits such as costs for parental, family, medical, or sick leave. However, it is worth noting that the CARES Act expressly excludes qualified sick and family leave wages for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act (FFCRA) (Public Law 116–127).


How large can my loan be?
Loans can be for up to two months of your average monthly payroll costs from the last year plus an additional 25% of that amount. That amount is subject to a $10 million cap. If you are a seasonal or new business, you will use different applicable time periods for your calculation. Payroll costs will be capped at $100,000 annualized for each employee.


How much of my loan will be forgiven?
You will owe money when your loan is due if you use the loan amount for anything other than payroll costs, mortgage interest, rent, and utilities payments over the 8 weeks after getting the loan. 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 also owe money if you do not maintain your staff and payroll.

  • Number of Staff: Your loan forgiveness will be reduced if you decrease your full-time employee headcount.
  • Level of Payroll: Your loan forgiveness will also be reduced if you decrease salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019.
  • Re-Hiring: You have until June 30, 2020 to restore your full-time employment and salary levels for any changes made between February 15, 2020 and April 26, 2020.

How can I request loan forgiveness?
You can submit a request to the lender that is servicing the loan. The request will include documents that verify the number of full-time equivalent employees and pay rates, as well as the payments on eligible mortgage, lease, and utility obligations. You must certify that the documents are true and that you used the forgiveness amount to keep employees and make eligible mortgage interest, rent, and utility payments. The lender must make a decision on the forgiveness within 60 days


What is my interest rate?
1.00% fixed rate.


When do I need to start paying interest on my loan?
All payments are deferred for 6 months; however, interest will continue to accrue over this period.


When is my loan due?
In 2 years.


Can I pay my loan earlier than 2 years?
Yes. There are no prepayment penalties or fees.


Do I need to pledge any collateral for these loans?
No. No collateral is required.


Do I need to personally guarantee this loan?
No. There is no personal guarantee requirement. ***However, if the proceeds are used for fraudulent purposes, the U.S. government will pursue criminal charges against you.***


Can I include 1099 workers in my payroll calculations for the PPP loans?
No. Independent contractors and other 1099 workers can apply for their own PPP loans beginning April 10.


Is there a risk that our bank will be out of loan money by the time I apply?
Yes. For this reason, you should apply as soon as possible. Wells Fargo, for example, announced on Sunday that it had already stopped taking PPP applications after hitting its $10 billion capacity. Check with your existing bank first, and if it isn't accepting applications you can try other lenders as well. If the PPP's $349 billion in loans runs out, analysts expect that Congress will pass legislation to add more funds.


What if I laid off employees and they already filed for unemployment benefits? Would we need to have them stop receiving unemployment in order to get the loan?
If you offer to re-hire an employee, they will no longer be eligible for unemployment benefits since they now have the option of accepting a job.


Can I use the PPP to pay new hires or increase pay for existing employees? How will this affect the amount I'm forgiven?
Yes. Keep in mind that the size of the loan and amount of forgiveness are both capped at $100,000 per employee on an annualized basis. Your loan is eligible for full forgiveness so long as you use at least 75 percent of it on payroll.


Which lenders are accepting applications for PPP loans?
The loans are being made available using a tiered rollout system, with traditional Small Business Administration lenders being the first institutions that can accept applications. Other financial institutions--including credit unions, Farm Credit System institutions, and Community Development Financial Institutions (CDFIs)--are now in the process of being added and will begin accepting applications in the coming days--if they haven't already.


Does the loan application have to be filled out in person or can it be done online?
The form can be submitted online, either on the institution's website or via email. Contact your existing institution or visit its website to find out the preferred method.


What are some key things we need to be aware of to make sure we legitimately qualify for the PPP loans?
In general, you're eligible for the PPP loans if your company has fewer than 500 employees and was in business as of February 15, 2020. Unlike with traditional U.S. Small Business Administration loans, nonprofits, sole proprietors, people who are self-employed, and people who make their income as independent contractors are eligible. There had been some confusion about whether having credit available elsewhere makes you ineligible, but you're eligible regardless of whether you have available credit elsewhere. Some industries, including many agricultural industries, define small businesses differently. You can view the size standards by industry on the SBA website.


What is the difference between a loan and a grant?
A grant is a loan that gets forgiven, meaning it doesn't have to be paid back. Your PPP loans will be forgiven so long as you don't lay off employees or reduce their pay by more than 25 percent (for employees making less than $100,000) within eight weeks of receiving the loan. If you do lay off employees, you won't be forgiven for any wages you don't actually pay, but your remaining employees' wages will still be forgiven.


If we have already executed layoffs, could we still be eligible for loan forgiveness if we bring back our employees?
If you rehire an employee, you'll be able to count their wages for the period during which they are on your payroll.