Employers with fewer than 500 employees and those that are under the applicable Small Business Administration size standards (1,000 for newspaper publishers) may now apply for Payroll Protection Program loans under the CARES Act.
While the application period is expected to remain open through June 30, 2020, WNA members who qualify for the loans and plan to apply are encouraged to do so as soon as practicable, as the funds allocated to the program are expected to only meet approximately 30% of the demand.
We’ve compiled answers to some of the most frequently asked questions about the program below.
CARES Act webinar
The Illinois Press Association also has made available an archived webinar presented by the law firm Barron Harris Healey titled “The CARES Act & What It Means for Newspapers.” You can watch it here or access the slides for the webinar here.
Loan applications should be made directly through a lender. If your lender is not an SBA-approved lender, you might want to consider working with one, as it will expedite the process. SBA-approved lenders can be found here.
Estimates range anywhere from a few days to a few weeks. Because of the overwhelming demand that is expected, it’s likely to be closer to a few weeks.
However, qualifying businesses can receive emergency grants of $10,000, in as quickly as 3 days by applying for an Economic Injury Disaster Loan. In order to qualify for an EIDL loan, you have to show you are subject to economic injury. The EIDL program is currently accepting applications.
Yes. However, you can’t use them for the same purpose. For example, you can’t “double-dip” to make payroll.
If you already have an EIDL, you can roll that into a PPP loan, though. (Reasons you might want to do this: PPP loans can be forgiven. They also have a much lower interest rate.)
Eligible expenses include salaries* for part-time and full-time employees; payment of a group health care plan; state and local payroll taxes, but not federal; vacation payments; sick time*, etc.
*Payments under the Families First Coronavirus Response Act and any individual salary costs in excess of $100K are considered ineligible.
No. Eligible payroll expenses for both PPP and EIDL loans include only full-time and part-time employees. Independent contractors will be able to directly apply for PPP loans starting April 10.
While guidance is still forthcoming on the details, it is expected that employers who maintain employment and salary levels will have all eligible expenses (payroll, mortgage, rent and utility payments) incurred in the eight weeks after the origination of the loan forgiven.
There are some criteria for loan forgiveness, however. Obligations must have been in effect by or before Feb. 15, 2020. It is also expected that 75% of expenses will have to be payroll costs. If less than 75% of qualified expenses are payroll costs, employers will still be eligible for forgiveness, however, it’s likely the loan forgiveness will be reduced to some extent. Those specific parameters remain unclear.
Employers who have made a reduction in their number of employees or have dropped wages will not be eligible for maximum loan forgiveness — unless those levels are restored by June 30, 2020.
OTHER RELATED RESOURCES:
- Quick Overview of the Program
- Borrower Information Fact Sheet on the Program
- A copy of the application for the program
- PPP-Loan-Amount-Calculator (Click HERE to watch the video tutorial)
