Payroll Protection Program & Federal Reserve Mainstreet Loans

Payroll Protection Program (PPP) Loan Clarifications for Self-Employment Income and Gaming Revenue

U.S. Treasury has issued another interim rule that clarifies eligibility and payroll calculations for individuals with self-employment income who file Form 1040, Schedule C, as well as details on how partnerships are treated. The rule also clarifies eligible use of PPP loan proceeds and amounts eligible for forgiveness, including documentation that you will need to provide to your lender.

The rule also opens PPP eligibility in regard to businesses with gaming revenue. Businesses are eligible if their legal gaming revenue (net of payouts but not other expenses) did not exceed $1 million in 2019 AND legal gaming revenue (net of payouts but not other expenses) comprised less than 50% of the business's total revenue in 2019.

Treasury also updated the FAQ document which you may find helpful.

For more information, please visit the U.S. Department of Treasury Website .

Farm Businesses Eligible for PPP

The SBA Montana District Office has this afternoon confirmed that farm businesses are eligible for PPP loans. Banks may rely on Schedule F to determine an eligible PPP loan based on payroll and wage costs. Yes, you add line 34 to the calculus.

EIDL SBA Disaster Loans

Keep in mind that PPP loans proceeds can only be used for payroll, rent, mortgage, and utility expenses and at least 75% must be used for payroll costs. SBA Disaster loan proceeds can be used for a wide assortment of business needs to address the COVID crisis. So, it still makes sense for many companies to apply for both programs. Think long-term for EIDL because your loan, if approved, probably will not fund for months. SBA has limited the quick advances on EIDL loans to $1,000 per employee up to a maximum of $10,000. The advanced amount will be deducted from any PPP loan forgiveness you are approved for.

Very Small Companies

If you have few employees, you may find yourself in a catch-22 situation. Some banks are not accepting PPP applications under $10,000, advising businesses to instead go after the EIDL advance. However, you will be limited to $1,000/employee for the EIDL advance which may not help you that much. If you find yourself in this situation, explain it to your banker or perhaps ask another bank or credit union. We are trying to convince Treasury to make CDFI's eligible to do PPP loans so we could help these very small businesses.

If you need immediate cash and are not getting anywhere with either PPP or EIDL, we can make small loans. The lowest interest rate we can go is 4% and we can't do any grants or loan forgiveness, but we do have funds available.

Federal Reserve Main Street Loans

The Federal Reserve has created a Main Street Lending Program to enhance support for small and mid-size businesses that were in good financial shape before the crisis. According to the Fed, mid-sized businesses are those with up to 10,000 employees, or revenue up to $2.5 billion. These loans will be made through your bank; minimum loan size $1 million. They are structured as 4-year loans. The Fed will buy 95% of each loan from banks. Firms that have taken advantage of the PPP may also take out Main Street Loans.

Here is a link to the Federal Reserve press release . And here is the Main Street New Loan Facility Term Sheet and the Main Street Expanded Loan Facility Term Sheet .