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Paycheck Protection Program (PPP) Loan

Helping Small Businesses Survive

During these turblent times, we are committed to our small business Members and are pleased to be participating in the Paycheck Protection Program (PPP) Loan as a way to help them. This program is part of an initiative the government recently passed called the Coronavirus Aid, Relief and Economic Security (CARES) Act, which assists small businesses with efforts like the Paycheck Protection Program.

We empathize with our small business owners who are doing their best to keep their employees working during a very turbulent time. We recognize that the number one pressure on small business owners right now is payroll. These unique loans are designed specifically to help small businesses weather this storm. We will be posting a link to begin the applciation process soon. Please check back.


Paycheck Protection Program (PPP) Loans 

The program provides cash-flow assistance through 100% federally guaranteed loans to employers who maintain their payroll during this emergency. Funds are provided in the form of a loan that will be fully forgiven when used for payroll costs, interest on mortgages, rent, and utilities. Due to likely high loan demand, at least 75% of the forgiven amount must have been used for payroll in order to be forgiven. Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government, any agents nor lenders can charge small businesses any fees.

Starting April 3, 2020, small businesses and sole proprietorships can apply. Starting April 10, 2020, independent contractors and self-employed individuals can apply. It is encouraged to apply quickly as there is a funding cap.

All lenders will have the same terms regardless of lender or borrower. Agents are not permitted to charge a fee to the borrower and all agent fees are to be paid by the lender.


Here’s What You Need to Know about a PPP Loan

Who Qualifies? – Small businesses with fewer than 500 employees that were in business on or before February 15, 2020. This can be an S Corp, C Corp, LLC, sole proprietorship or independent contractor. It also includes certain nonprofits, tribal groups and veteran groups. When obtaining the PPP loan, you need to certify that your business has been economically affected or that economic uncertainty make the loan necessary.


How Much is Available to My Small Business? – Up to $10 million dollars. But the amount each business gets is based on its payroll costs. The amount you qualify for is based on 2.5 times your average monthly payroll costs. Your monthly average payroll is calculated based on your prior 12 months of payroll costs. You take that average monthly payroll number and multiply it by 2.5. For example, if your monthly average payroll was $20,000, then you would qualify for a $50,000 PPP Loan.


What’s Included in Monthly Payroll Costs? – It includes salary, wages, commissions, payment of vacation, sick, parental/family/medical leave, payment of retirement contributions, group health coverage premiums and state and local taxes assessed on payroll. It doesn’t include federal payroll taxes or payroll costs for those making more than $100,000. Their first $100,000 is considered, but anything in excess is not considered for determining average monthly payroll costs.


What Can I Use This Money For? – The PPP is designed to be used specifically for payroll for you and your employees. Additional provisions allow the funds to be used for rent, mortgage obligations, utilities and other debt obligations you may have.


What Is The Interest Rate and Terms of This Loan? – The interest rate is 1%. The loan term specified by the treasury is two years. Loan payments are deferred for the first six months. There is no pre-payment penalty, so you can repay or have the loan forgiven earlier if desired.


Do I Have to Put Up Collateral or Sign a Personal Guarantee? – No. For this particular SBA loan no guarantees are required.


How Do I Get This Loan Forgiven? – The loan forgiveness provision is one of the most appealing aspects of this loan. Small businesses are eligible for loan forgiveness for the amounts spent over the next eight weeks after receiving the loan on certain qualifying expenses. Qualifying expenses over the eight-week period includes payroll costs, rent, interest on mortgage debt and utilities.

If the number of full-time employees is reduced over this time period or if your payroll costs are reduced 25% or more, the amount of the loan eligible for forgiveness will be reduced. Business must request forgiveness of the loan, with evidence, to First Source and we will have 60 days to approve or deny the forgiveness.


Payroll Includes:

  • Salary, wages, commissions or similar compensation;
  • Payment of cash tips or the equivalent;
  • Payment for vacation, parental, family, medical or sick leave;
  • Allowance for dismissal or separation;
  • Payment required for the provisions of group health care benefits, including insurance premiums;
  • Payment of any retirement benefits; and
  • Payment of state or local (but not federal, e.g., FICA) tax assessed on the compensation of employees.

Payroll DOES NOT Include: 

  • Compensation “in excess of an annual salary of $100,000” for any given employee, owner, partner, sole proprietor or independent contractor;
  • (again) federal withholding;
  • Compensation for any employee whose principal place of residence is outside of the United States;
  • Qualified sick leave wages for which a credit is allowed under section 7001 of the Families First Coronavirus Response Act (Public Law 116-127); or
  • Qualified family leave wages for which a credit is allowed under section 7003 of the Families First Coronavirus Response Act (Public Law 116-127).

SBA PPP Application Instructions

The SBA Payroll Protection Program (“PPP”) Loan program can be initiated by providing your information and document through an online portal.

STEP 1: DOCUMENTATION COLLECTION

Gather the following documentation, complete the applicable forms, and scan the documents in a format (pdf preferred) that can be uploaded to the application portal:

List of Required Documentation

  1. Articles of incorporation/organization (corporations) or bylaws/operating agreement (LLCS) or business license (sole proprietorships)
  2. Completed payroll protection program application form
  3. 2019 irs quarterly 940, 941 or 944 payroll tax reports
  4. 2019 payroll report (including payroll taxes and number of employees) for calendar year 2019 or 2020 payroll report from January 1, 2020 to February 29, 2020 (new businesses only)
  5. Documentation showing total of all health insurance premiums paid by the company owner(s) under a group health plan. Include all employees and the company owners
  6. Document the sum of all retirement plan funding that was paid by the company owner(s) (do not include funding that came from employees out of their paycheck deferrals).
  7. Completed payroll calculator worksheet
  8. List of all employees with annual salary or compensation in excess of $100,000
  9. Copy of front and back of drivers license or passport for all authorized signers of business
  10. Schedule of any supplementary facts or answers as requested in the application

STEP 2: ACCOUNT CREATION

We work directly with  Member Business Financial Services for the PPP Loan program. Follow the instrucitons below to get started.

  • Directly under “Log In” click on New Customer? Sign Up
  • What product are you interested in? Select SBA
  • Enter First Name, Last Name, Email, and Mobile information
  • Select Continue
  • You will receive a notice that says “Check your email for a link to the application” (Note: the email will be coming from Salesforce so please check your junk or spam folder if you do not receive it within a few minutes)

STEP 3: ENTER APPLICATION INFORMATION

  • From your email, select the link or button to apply for a loan
  • You will jump to your browser and be prompted to “Create a Password”
  • Once a password is created you will walk through the application process

Request Section:

  • Loan Amount: Please enter an estimated loan amount based on eligibility guidelines above. Our intention is to provide a loan amount to the fullest extent eligible.
  • Loan Purpose: Enter “PPP loan program”
  • Are you affiliated with a Credit Union? If yes, please enter the credit union you desire to fund the loan

Your Business Section:

  • Legal Business Name: This is the corporate name of the operating small business or non-profit
  • Annual Revenue: estimated 2019 revenue
  • Tax Identification Number
  • Legal Entity Type
  • Where is your business located? Billing and physical address

Personal Info Section:

  • Role: Select either Owner, Co-Owner, or Partner
  • Social Security Number (of owner/partner)
  • Contact Information: Enter home and personal mailing address
  • Answer Yes/No to Legal Information questions

Borrowers & Guarantors:

  • Select “Skip.” All PPP loans will be made to only one entity and will not require a personal guarantee, co-borrowers, or collateral.

Review and Submit

  • Review the section under “Does everything look right?”
  • Click authorization box
  • Select “Submit Application”

STEP 4: UPLOAD DOCUMENTS

  • You will be taken to a summary screen about next steps in the process along with a follow-up email. Select “Go To Dashboard.”
  •  Either through the email confirmation or through the application portal you will be at the mail dashboard.
  • Under the To-Do List there is an “Upload Documents” section. Members applying for the PPP loan can ignore the requests under this section.
  • In the “Additional Documents” section, you have the option to upload documents either by “drag & drop” or browsing your computer for the electronic version of the documents.
  • Upload the documents from Step 1.
  • When all documents have been uploaded please send a follow-up email to your credit union contact. Please understand that processing cannot begin on your application until all required documents are completed

STEP 5: LOAN PROCESSING & CLOSING

Credit union will begin processing loan request, verify eligibility, and coordinate with business to arrange closing.


We will continue to keep you updated on any additional solutions that may help you or your business. As always, we are here to help. If you have any questions or concerns, please call us at 315-735-8571 or message us directly through our secure online banking platform.

The Paycheck Protection Program (PPP) Loan is for existing First Source Members only.