Paycheck Protection Program: Info for Promo Products Businesses

By Sean Norris

A major part of the U.S. government's $2 trillion stimulus package, passed last week, was the $349 billion in total loans for small businesses. Known as the Paycheck Protection Program (PPP), the lending program is now taking applications. Here are some key details and questions for promotional products businesses, including eligibility information and a link to the application form. Scroll down to the bottom for updated information on early outages and technical difficulties in processing some loans.

Who's Eligible?

Any small business that has 500 or fewer employees (per SBA business size classifications) and was in existence on Feb. 15, 2020. This includes independently-owned franchises, sole proprietors, independent contractors and self-employed individuals.

When Can I Apply?

The program opened Friday, April 3 and is now taking applications. As there is a funding cap ($349 billion total), the Treasury Department recommends businesses apply as soon as possible.

How Do I Apply?

Businesses can apply for loans through existing SBA 7(a) lenders or participating federally insured depository institutions, federally insured credit unions and Farm Credit System institutions. Click here to view a list of the 100 most active SBA 7(a) lenders, or here for more information on finding an SBA 7(a) lender.

What Is the Maximum Loan Amount?

Applicants can borrow 2.5 times their average monthly payroll for the previous year, up to a maximum of $10 million.

How Can I Use the Funds?

Funds can be used for certain costs incurred between Feb. 15 and June 30 of this year. These include payroll costs (salary or wages, paid leave, health care or retirement benefits, payments to independent contractors, payroll taxes and more), mortgage payments, rent/lease payments, utilities, interest on debt incurred before Feb. 15 and certain other areas. Some of these funds are considered covered expenses, which are forgivable under the terms of the loan. (See next item.) The Treasury Department said recipients can only use up to 25 percent of the loan on non-payroll costs.

Are These Loans Forgivable?

Paycheck Protection Program loans used to cover payroll, mortgage, rent or utilities in the 8-week period following the date of the loan are considered covered expenses and are forgivable. Businesses that do not retain staff and payroll will see reduced loan forgiveness. Businesses that already cut staff can regain eligibility for loan forgiveness if they restore headcount and wages by June 30, according to the U.S. Chamber of Commerce. Click here for more details on how PPP loan forgiveness is calculated.

How Do I Request Loan Forgiveness?

Loan forgiveness requests must be submitted to the lender servicing the loan. Requests must include documents verifying the number of full-time equivalent employees (plus pay rates) and payments on eligible mortgage, lease and utility obligations. Recipients must certify that loans were used to keep employees and make eligible mortgage interest, rent and utility payments.

Do Commissions Count as Covered Payroll Costs?

Yes. Commissions are treated as a payroll cost, capped at $100,000 on an annualized basis for each employee. This also includes commissions as a sole proprietor or independent contractor.

Interest and Repayment Details

Paycheck Protection Program loans carry a fixed interest rate of 1 percent. Payments are deferred for six months. (Interest will continue to accrue over this period. Full repayment is due in two years. There are no prepayment penalties or fees.

The Form

The Paycheck Protection Program borrower application form can be found here.

Technical Difficulties

Since launching Friday, the program has experienced a number of issues. The Small Business Administration's E-Tran system, which is used to process applications, was down for much of the day Monday. Banks reported issues authorizing loans using the system, and some said the system was asking for information not required on applications. Others reported difficulties accessing the system.

Wells Fargo said it has already stopped taking Paycheck Protection Program requests after reaching $10 billion in loans, citing government regulations placed upon it. Citigroup was not offering loans Friday, but reversed course and planned to launch a loan portal this week. SBA representatives said the the system was up and running despite isolated hangups, and that $38 billion in loans have already been approved, according to NBC News.

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Didn't find what you were looking for? Click here for more information from the Small Business Administration.