Paycheck Protection Program (PPP)
A provision of the CARES Act, the Paycheck Protection Program (PPP) provides loans to small businesses impacted by Coronavirus to help cover payroll costs and other expenses (including rent, utilities, and mortgage interest). The loan is backed by the Small Business Administration (SBA).
The Paycheck Protection Program is being developed and is subject to terms and conditions in the interim final rule(s) and guidance provided by the U.S. Treasury Department and the SBA.
We cannot accept PPP applications submitted or processed by an agent (including accountants, attorneys, consultants, etc.).
We will accept PPP loan applications through Wednesday, August 5, 2020.
The loans are fully guaranteed by the SBA and have the same terms:
- 1.0% fixed interest rate
- Five-year maturity
- No borrower fees
- Payments deferred until forgiveness decision or 10 months after 24-week covered period
If your small business received a Paycheck Protection Program (PPP) loan, all or a portion of the loan may be eligible for forgiveness. There are specific requirements businesses must meet for the loan to be forgiven.
We will contact borrowers via email with next steps to apply for forgiveness.
In the meantime, it’s a good idea to review what the SBA has published on forgiveness and keep thorough records of how the loan proceeds have been spent within the covered period.
For more information, please review the guidance from Treasury and SBA.
What businesses are eligible?
Small businesses with 500 or fewer employees—including nonprofits, veterans’ organizations, tribal concerns, self-employed individuals, sole proprietorships, and independent contractors—are eligible for the PPP. However, some business types are not eligible. For a list of ineligible businesses, view the SBA guidelines.
How do I apply?
To apply, please contact your First Interstate banker.
What do I need to apply?
- 2019 payroll summary reports. This may be from your accounting system.
- The following 2019 tax forms—2019 940 or 2019 Q1-Q4 941s, AND W-3s. If you use a third-party payroll company, verification of payroll taxes may come from that report.
- If you are self-employed, please provide your completed 2019 Schedule C—even if you haven’t filed your tax return for 2019 yet—and a 2019 Form 1099-MISC detailing nonemployee compensation received. A Schedule F is acceptable for farm income.
- Verification that you had employees on or around February 15, 2020. This may be a payroll tax statement, such as your 2020 941 for the first quarter, or something similar. We need to verify you were in business and paying people (or in operation if self-employed) as of that date.
- Supplemental information such as employer paid benefit statements to support any additional payroll expense. These include benefits such as health and retirement plans.
Is there a deadline to apply?
Loans must be approved by the SBA by August 8, 2020.
What is the maximum loan amount? How is it calculated?
Loans can be for up to two months of your average monthly payroll costs, plus an additional 25% of that amount. The loans are capped at $10 million and are subject to application approval. Here’s how to calculate:
- Aggregate payroll costs from the last 12 months for employees whose principal place of residence is in the United States. If self-employed, use Line 31—Net Profit Amount—from your 2019 Schedule C.
- Subtract any compensation paid to an employee in excess of an annual salary of $100,000, and/or any amounts paid to an independent contractor or sole proprietor in excess of $100,000 per year
- Divide that amount by 12 to calculate average monthly payroll costs
- Multiply average monthly payroll costs by 2.5
- Add 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” (because that does not have to be repaid)
How may the loan be used?
PPP loans may be used for:
- Payroll costs, including salary, wages, commissions, or tips. Payroll costs are 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
- Interest on mortgage obligations, incurred before February 15, 2020
- Rent, under lease agreements in force before February 15, 2020
- Utilities, for which service began before February 15, 2020
- Refinancing an SBA Economic Injury Disaster Loan (EIDL) made between January 31, 2020, and April 3, 2020
Will collateral or personal guarantees be required?
Can I apply for both PPP and an Economic Injury Disaster Loan (EIDL)?
Can I apply for more than one PPP loan?
No, only one PPP is allowed per business.
Do independent contractors count as employees for the purpose of PPP loan calculations?
No, independent contractors have the ability to apply for a PPP loan on their own so they do not count for purposes of a borrower’s PPP loan calculation.