Paycheck Protection Program
To Valued Customers,
On 3/27/20, President Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act of which part provides $350 billion of funding through the SBA 7 (a) loan program. As a reference, here’s the link for the approved Bill:
Known as the Paycheck Protection Program the initiative is specifically designed to help small businesses keep their workforce employed.
- The new loan program will be available retroactive from Feb. 15, 2020, so employers can rehire their recently laid-off employees through June 30, 2020.
Loan Terms & Conditions
- Eligible businesses: All businesses, including non-profits, Veterans organizations, Tribal concerns, sole proprietorships, self-employed individuals, and independent contractors, with 500 or fewer employees, or no greater than the number of employees set by the SBA as the size standard for certain industries
- Maximum loan amount up to $10 million
- Loan forgiveness if proceeds used for payroll costs and other designated business operating expenses in the 8 weeks following the date of loan origination (due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs)
- 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.
- All loans under this program will have the following identical features:
- Interest rate of 0.5%
- Maturity of 2 years
- First payment deferred for six months
- 100% guarantee by SBA
- No collateral
- No personal guarantees
- No borrower or lender fees payable to SBA
The Small Business Administration (SBA) expect to have this program up and running by April 3rd so that businesses can go to a participating SBA 7(a) lender, bank, or credit union and apply for a loan as of the following dates:
- April 3rd – small businesses and sole proprietors
- April 10th – independent contractors and self-employed individuals
You are not alone!! As an experienced SBA Lender, Lake Area Bank will help you through this process. Because this is an SBA loan, we as your lender will lead the process by reviewing and approving your loan prior to submitting to the SBA for their final approval.
Given that funds are limited and expected to go fast, we can’t guaranty that all businesses that apply will receive funding. However, in an effort to expedite the application process, we recommend you start preparing the following to the extent this is something you’re interested in applying for. Please be accurate and as detailed as possible so as not to delay the processing of your application.
- Familiarize yourself with the Paycheck Protection Program. The following are a couple of good resources to review.
US Chamber Checklist
Complete and gather the following documents and submit to your Lake Area Bank Business Banker.
- Paycheck Protection Program Application (https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Application-3-30-2020-v3.pdf)
- Articles of Incorporation/Organization of each borrowing entity ( non-customers only)
- By Laws/Operating Agreement of each borrowing entity ( non-customers only)
- All owners Driver’s Licenses
- Payroll Expense verification documents to include:
- IRS Form 941 and 944 (all filed in 2019)
- Payroll Summary Report for full 2019
- If a Payroll Summary Report is not available, Employee Pay Stubs as of December 31, 2019 (or corresponding period) with corresponding bank statement, and breakdown of payroll benefits (vacation, allowance for dismissal, group healthcare benefits, retirement benefits, etc.)
- Payroll costs will be capped at $100,000 on an annualized basis for each employee so records provided must show detail to reflect those employees
- 1099s (if Independent Contractor)
- Trailing twelve-month profit and loss statement (as of the date of application) for all applicants
- Personal Tax Returns (2018 or 2019 if available for each owner)
- Business Tax Returns (2018 or 2019 if available for each entity)
- Most recent Mortgage Statement or Rent Statement (Lease)
Most recent Utility Bills (Electric, Gas, Telephone, Internet, Water, etc.)
Some of this may be more (or less) than needed but being prepared will help ensure a timely application without delays. If you have any questions, please contact your Lake Area Bank business banker.
WHITE BEAR LAKE:
HUGO & FOREST LAKE:
Thank you for banking at Lake Area Bank!!