CARES Act: Paycheck Protection Program (PPP)
On Friday, March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law. This act includes a variety of programs designed to help individuals, small businesses, and large corporations; this email focuses on the Paycheck Protection Program.

What is the Paycheck Protection Program (PPP)?
A significant focus of the CARES Act – $350 Billion – is on the retention of employees, with the goal of helping the economy bounce back faster after the COVID-19 crisis. This program is retroactive to February 15, 2020 in order to help workers who may have already been laid off back onto payrolls.

This loan will be structured similarly to the SBA’s 7(a) loan program, but will have a 100% federal government loan guarantee. All lenders can provide loans, and there is no personal guarantee or collateral required.

How can I use the money?
The PPP provides small businesses with forgivable loans of up to $10 million per company (8 weeks of payroll) for:

  • Paid vacation, sick, medical or family leave;
  • Costs related to continuation of group healthcare benefits during periods of leave;
  • Employee salaries ,wages, commission, or similar compensation;
  • Payments of interest on a mortgage (not prepayment of or payment on principal) or on rent;
  • Utilities payments
  • Payment of retirement benefits;
  • Payment of state or local tax assessed on the compensation of employees; and
  • Any other debt obligations.

Note: Payroll costs exclude compensation paid to individuals above $100,000 a year.

Who is eligible?
To be eligible, businesses must:
  • Be a small business, as defined by the SBA and have been in business on February 15, 2020.
  • Businesses in the Accommodation and Food Services Sector (NAICS Code 72) are eligible with up to 500 employees at each location.
  • This program also supports non-profits with a 501 (c)(3) and fewer than 500 employees, sole proprietors, the self-employed, and independent contractors

Program Administration & What You Can Do Now
This program will be administered by the Small Business Administration . Because the CARES Act was just announced, the SBA is still working on identifying the details of program administration. However you can still prepare:
  • If you do not currently have a banking relationship with an SBA lender, identify the SBA lender(s) near you – the list for Wisconsin begins on page 26 of this guide. The Department of the Treasury will also be able to authorize new lenders moving forward.
  • Gather and review last year’s payroll cost records to determine the maximum PPP Loan eligibility.
  • Prepare an eight-week budget for payroll costs, mortgage and rent payments, and utility expenses. When establishing this budget, potential borrowers should plan modifications to headcount and paid wages and salaries taking into account the potential reduction factors noted above, and should be aware of payment deferrals offered by lenders or landlords, or utility providers, in order to maximize the potential forgiveness amount of the PPP Loan.
  • Compile documentation and records to support your application and determinations related to PPP Loan and forgiveness amounts.
  • Prepare a summary statement demonstrating why the PPP Loan request is necessary to support the business operations as a result of current economic conditions.

If I apply for a PPP, can I still apply for other SBA loans?
Yes. Borrowers may apply for PPP loans and other SBA financial assistance, including Economic Injury Disaster Loans (EIDLs), 7(a) loans, 504 loans, and microloans, and also receive investment capital from Small Business Investment Corporations (SBICs). However, you cannot use your PPP loan for the same purpose as your other SBA loan(s). For example, if you use your PPP to cover payroll for the 8-week covered period, you cannot use a different SBA loan product for payroll for those same costs in that period, although you could use it for payroll not during that period or for different workers.
Economic Injury Grants (not part of PPP)
These grants provide an emergency advance of up to $10,000 to small businesses and private non-profits harmed by COVID-19 within three days of applying for an SBA Economic Injury Disaster Loan (EIDL). To access the advance, you first apply for an EIDL - directly through the SBA - and then request the advance.

The advance does not need to be repaid under any circumstance, and may be used to keep employees on payroll, to pay for sick leave, meet increased production costs due to supply chain disruptions, or pay business obligations, including debts, rent and mortgage payments. 
The Wisconsin SBDC Network is a proud part of the  Institute for Business & Entrepreneurship  in the  University of Wisconsin System . It is funded in part through a Cooperative Agreement with the  U.S. Small Business Administration.