As part of the Coronavirus Aid, Relief and Economic Security or CARES Act, the government has released the Paycheck Protection Program (PPP). Under this program, banks will offer small business loans through the Small Business Administration (SBA).
4/27/2020 UPDATE: As of 9:30 am this morning, an additional $250 billion of SBA PPP funds were released as part of the Coronavirus Aid, Relief and Economic Security or CARES Act.
6/05/2020 UPDATE: On Friday, June 5, 2020, President Trump signed a bill called the Paycheck Protection Program Flexibility Act. The bill extends the forgiveness period for all PPP loans from 8 weeks to 24 weeks from the date of loan funding. The bill would also reduce the minimum amount of proceeds that businesses must devote to maintaining payroll from 75% to 60% in order to receive forgiveness. Additionally, it would extend the maturity period for unforgiven PPP loans. (1)
7/07/2020 UPDATE: The SBA PPP Loan Program has been extended from June 30, 2020 to August 08, 2020.
As of April 3rd, small businesses, some nonprofit organizations, independent contractors and self-employed individuals can apply for this loan. The Paycheck Protection Program is a loan designed to provide direct incentive for small businesses to keep their workers on payroll. According to the SBA, the loans will be forgiven when all employees are kept on the payroll for eight weeks and the money is used for payroll costs, interest on mortgages, rent and utilities. The program is available now through August 08, 2020.
Who Can Apply?
The following entities affected by Coronavirus (COVID-19) may be eligible:
- Any small business concern that meets SBA’s size standards (either the industry based sized standard or the alternative size standard)
- Any business, 501(c)(3) non-profit organization, 501(c)(19) veterans organization, or Tribal business concern (sec. 31(b)(2)(C) of the Small Business Act) with the greater of:
- 500 employees, or
- That meets the SBA industry size standard if more than 500
- Any business with a NAICS Code that begins with 72 (Accommodations and Food Services) that has more than one physical location and employs less than 500 per location
- Sole proprietors, independent contractors, and self-employed persons (2)
Loan Details and Forgiveness
The loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities (at least 75% of the forgiven amount must have been used for payroll). Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees. Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease. This loan has a maturity of 2 years and an interest rate of 1%. (2)
How to Apply
To begin the process, please call (701) 664-3388 in Tioga or (701) 965-6333 in Crosby.
For additional COVID-19 related resources, visit our COVID-19 Resources for Small Businesses blog post: https://blog.thebankoftioga.com/covid-19-small-business-resources
About The Bank of Tioga: The Bank of Tioga is a community bank that values citizenship, exceptional client service and serving as a business leader in its community. Committed to supporting local organizations, the bank reinvests a portion of its net income back to the community. The Bank of Tioga, with $350 million in assets, was chartered in 1951 and was acquired by TS Contrarian Bancshares in 2014 and an affiliate of TS Banking Group. Locations include Tioga and Crosby, North Dakota. For more information visit thebankoftioga.com.