Paycheck Protection Program

This page provides a summary of certain provisions of the Small Business Administration’s Paycheck Protection Program (PPP). This information is summarized from publicly available CARES Act legislation and does not include SBA guidance. As a result, the information is preliminary and subject to change.

Loan Amount – Generally, the maximum loan amount is a calculated formula equal to 2.5 times of the borrower's average monthly payroll for the immediately preceding 12-month period, up to a maximum loan amount of $10 million.

  • Payroll is defined as: salaries and wages, cash tips or equivalent, vacation / medical / sick leave, allowance for separation / dismissal, healthcare benefits / insurance, retirement benefits and state payroll taxes. All payroll calculations for PPP loans must exclude the monthly amount in excess of $100,000 annualized per person.
    Example: Trailing 12 months Payroll = $1,200,000.  Average monthly payroll = $100,000.  Maximum Loan Amount = $100,000 x 2.5 = $250,000

Use of Proceeds –
Borrowers are permitted to use proceeds of a PPP loan ONLY for the following purposes (refinancing an EIDL loan may be permitted, subject to SBA guidance):

  • Payroll
  • Interest on mortgage obligations and other secured debt
  • Rent
  • Utilities

Loan Forgiveness –
The principal amount of a PPP loan is eligible for borrower forgiveness to the extent the loan proceeds are spent on:

  • Payroll
  • Interest paid on secured debt obtained prior to 2/15/2020
  • Rent paid on lease in place prior to 2/15/2020
  • Utilities in place prior to 2/15/2020

The amount to be forgiven will be reduced based on certain reductions in average FTE headcount and reductions of more than 25% in average salary expense.

Other Loan Terms – PPP loans will be on full payment deferral for at least 6 months and up to 12 months, to be determined by the program rules. There will be no borrower fees and no prepayment penalties. Any loan amount not forgiven as described above will become an SBA 10-year working capital loan.

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