As part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act in response to the COVID-19 pandemic, the U.S. Congress allocated up to $350 billion for the Paycheck Protection Program (PPP), administered by the Small Business Administration (SBA).  The program is available to American companies who qualify, including farmers and ranchers, and is designed to provide a direct incentive for small businesses to keep their workers on the payroll.

SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities.  All applications must be submitted through an existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating.

If you decide to apply for the program, your first step should be to contact your local lender to find out if they are participating in the program. The PPP will be available through June 30, 2020.

Frequently asked quested are listed below, and more details on the program are available at: https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program-ppp

Q: Who is eligible?

• Applicant was in operation on 2/15/2020 AND
• Had employees for whom it paid salaries and payroll taxes, OR paid independent contractors, OR is a sole proprietor

Q: What is maximum loan amount?

• Up to 2.5 months worth of payroll costs (see below)
• Maximum loan is $10,000,000, with maximum 2-Year Term

Q: What can loan funds be used for?

• Payroll costs – at least 75% of loan funds must be used for payroll costs
• Mortgage Interest / Lease Payments
• Utilities
• Interest on other debt
• Refinance prior disaster loans (prior to COVID-19)

Q: Can loans be forgiven?

• Yes, if borrower provides documentation of approved use of funds

Q: What qualifies as “payroll costs?”

• Compensation to employees whose principal place of residence is the United States, in the form of salary, wages, commissions, or similar compensation, capped at no more than $100,000 per employee
• Cash tips or the equivalent, based on employer records of past tips or, in the absence of such records, a reasonable, good-faith employer estimate of such tips
• Payment for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal; payment for the provision of employee benefits consisting of group health care coverage, including insurance premiums, and retirement
• Payment of state and local taxes assessed on compensation of employees
• For an independent contractor or sole proprietor, wage, commissions, income, or net earnings from self-employment or similar compensation