Small business loan program gets underway

UNITED STATES--The government's 'Paycheck Protection Program' started Friday, April 3 providing loans to small businesses to avoid bankruptcy as the country fights the global coronavirus pandemic.
President Donald Trump remarked, "These loans will be forgiven as long as a business keeps paying their workers."
Even though the administration is still answering questions about the program details, some of the key questions and answers from the U.S. Department of the Treasury include the following:
What is the time frame of the loan program? The program is intended to provide eight weeks of payroll and certain other overhead expenses to keep workers employed.
Will local financial institutions be involved with these funds? Yes. Officials are calling this a public-private partnership. Disbursement of the funds will be administered at the community level from participating financial institutions.
Can independent contractors and self-employed people apply? Yes, starting April 10, 2020.
Where can I apply? You can apply through any existing SBA lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. You should consult with your local lender as to whether it is participating. Visit www.sba.gov for a list of SBA lenders.
Who can apply? All businesses - including nonprofits, veterans organizations, tribal business concerns, sole proprietorships, self-employed individuals, and independent contractors - with 500 or fewer employees can apply. Businesses in certain industries can have more than 500 employees.
What do I need to apply? You will need to complete the Paycheck Protection Program loan application and submit the application with the required documentation to an approved lender that is available to process your application by June 30, 2020.
What other documents will I need to include in my application? You will need to provide your lender with payroll documentation.
Do I need to first look for other funds before applying to this program? No. We are waiving the usual SBA requirement that you try to obtain some or all of the loan funds from other sources.
How long will this program last? Although the program is open until June 30, 2020, we encourage you to apply as quickly as you can because there is a funding cap and lenders need time to process your loan.
How many loans can I take out under this program? Only one.
What can I use these loans for? You should use the proceeds from these loans on your: Payroll costs, including benefits; Interest on mortgage obligations, incurred before Feb. 15, 2020; Rent, under lease agreements in force before Feb. 15, 2020; and Utilities, for which service began before Feb. 15, 2020.
What counts as payroll costs? Payroll costs include: Salary, wages, commissions, or tips (capped at $100,000 on an annualized basis for each employee); Employee benefits including costs for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal; payments required for the provisions of group health care benefits including insurance premiums; and payment of any retirement benefit; State and local taxes assessed on compensation; and for a sole proprietor or independent contractor: wages, commissions, income, or net earnings from self-employment, capped at $100,000 on an annualized basis for each employee.
How large can my loan be? Loans can be for up to two months of your average monthly payroll costs from the last year plus an additional 25 percent of that amount. That amount is subject to a $10 million cap.
How much of my loan will be forgiven? You will owe money when your loan is due if you use the loan amount for anything other than payroll costs, mortgage interest, rent, and utility payments over the eight weeks after getting the loan.
You will also owe money if you do not maintain your staff and payroll.
• Number of Staff: Your loan forgiveness will be reduced if you decrease your full-time employee headcount.
• Level of Payroll: Your loan forgiveness will also be reduced if you decrease salaries and wages by more than 25 percent for any employee that made less than $100,000 annualized in 2019.
• Re-Hiring: You have until June 30, 2020 to restore your full-time employment and salary levels for any changes made between Feb. 15, 2020 and April 26, 2020.
The SBA released further clarifications Monday, April 6 regarding the forgiveness of the Paycheck Protection Program. Thomas Mazurek and Charles Pezzino of the certified public accounting firm Tronconi Segarra & Associates (located in Williamsville, NY) said the calculations for forgiving a loan will be based on the business restoring full-time equivalents to the payroll by June 20, 2020.
How can I request loan forgiveness? You can submit a request to the lender that is servicing the loan. The request will include documents that verify the number of full-time equivalent employees and pay rates, as well as the payments on eligible mortgage, lease, and utility obligations. The lender must make a decision on the forgiveness within 60 days.
Small Business Association (for the Buffalo and Rochester region) District Director Franklin J. Sciortino said Friday, April 3, "As of 1 p.m. today the SBA has processed 3,998 Paycheck Protection Program loans for a dollar amount of $1.4 billion through 400 local financial institutions nationwide."
For a local business to proceed with this program, Sciortino said a business owner should go to their 'bank of account.'