Paycheck Protection Program (PPP)
Applications Opening Soon
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Over the last few days, the government has been developing processes to help small businesses access the $349 billion allocated to the Paycheck Protection Program (PPP). On Monday, we shared an
initial overview
of the program; this message is intended to provide you with further details.
What are the details?
The goal of this
program
is to help business owners keep their workers employed by providing loans for 8 weeks of payroll (see payroll calculation information below) and certain overhead. These loans will be forgiven as long as the funds are used to keep employees on the payroll and their use is properly documented.
- Eligible businesses: small businesses who meet the size standards set by the SBA (generally <500 employees), non-profits, veterans organizations, Tribal concerns, sole proprietorships, self-employed individuals, and independent contractors
- Maximum loan amount up to $10 million
- All loans under this program will have:
- 100% guarantee by SBA
- No collateral
- No personal guarantees
- No borrower or lender fees payable to SBA
For purposes of calculating “Average Monthly Payroll,” most Applicants will use the average monthly payroll for 2019, excluding annual costs over $100,000 per employee.
- Seasonal businesses: Applicants use average monthly payroll for the time period between February 15 - June 30, 2019.
- New businesses: Applicants use average monthly payroll for the time period from January 1 - February 29, 2020.
How do I apply?
The PPP will be accessible through
participating lending institutions
(list begins on p. 26). The SBA is also in the process of authorizing additional lenders; those will be
listed online as they come available
. If you do not have an established SBA banking partner in place, we recommend
contacting an SBA lender after Friday to see if they are offering the PPP.
Applications will be available as early as:
- Friday, April 3, 2020 for small businesses
- Friday, April 10, 2020 for independent contractors and the self-employed.
The application will remain open until June 30, 2020.
Notes:
- To encourage employers to rehire any employees who have already been laid off due to the COVID-19 crisis, borrowers that rehire previously laid-off workers by June 30, 2020, will still qualify and not be penalized for having a reduced payroll during the loan period.
- While an official application form has NOT yet been made available, a sample application form is available on the SBA website.
Loan Forgiveness
Loan funds that do not comply with the program rules or that do not have proper documentation will be subject to repayment.
In order to expedite the loan application process, the initial application process requires limited documentation. However, to qualify for loan forgiveness, applicants will need to make various certifications (see
sample application
for examples) during the application process and will need to submit documentation for covered costs after the loan has been received. Applicants will work directly with their lenders on this process.
Loan amounts may be forgiven as long as:
- The loan is used to cover payroll costs – and some mortgage interest, rent, and utility costs - over the 8 week period after the loan is made
- The employer maintains/quickly rehires employees and maintains salary levels (<$100,000 annual per employee). Reductions in employee numbers – or >25% reductions in pay – will reduce the amount of loan forgiveness.
- Due to anticipated program demand, it is unlikely that more than 25% of the forgiven amount may be for non-payroll costs.
Loan money used for expenses beyond those specifically outlined in the program – or in the case of insufficient documentation of expenses and/or additional staff reduction – will need to be repaid under the following terms:
- Interest rate of 0.5%
- Maturity of 2 years
- First payment deferred for six months
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MadREP Survey
Help Us Track COVID-19's Impact on Madison-Area Businesses
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In collaboration with WEDC, MadREP
and Dane/Sauk/Columbia Counties, we ask that you complete
this survey by
April 6
.
It will be used to measure economic loss and to assist in future recovery efforts, as this COVID-19 pandemic plays out across Wisconsin. Our hope is that by collecting specific impact statistics, our area will be better positioned to receive any additional aid that may come available in the future.
The results will be available at the county, region, and state levels. You will note this survey tool is dated and stamped with Observation Period #1. After your survey completion, you will get a second survey stamped Observation Period #2 on or around May 1st.
Thank you for your help in this important matter.
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Dane Buy Local Announces Small Business Pandemic Support Grant Program
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This grant is available for small businesses experiencing financial difficulties as a result of the COVID-19 outbreak.
There is $250,000 of available funding to support Dane County locally-owned small businesses. Grant awards will range from $1,000 to $50,000.
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