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Here are some guidelines for the Paycheck Protection Program

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FARGO - Here are some important things to know about the Paycheck Protection Program, according to the U.S. Chamber of Commerce and the U.S. Senate Committee on Small Business and Entrepreneurship.

Who is eligible?

  • A small business with fewer than 500 employees (all full-time, part-time and any other status).
  • A small business that meets the SBA’s size standard (which varies widely by industry for the number of employees and annual average receipts).
  • A 501(c)(3) nonprofit organization with fewer than 500 employees.
  • A sole proprietor, independent contractor or gig worker
  • An individual who is self-employed who regularly carries on any trade or business.
  • A tribal business concern that meets the SBA size standard.
  • A 501(c)(19) veterans organization that meets the SBA size standard.

Also, some special rules may make you eligible:

  • If you are in the accommodation and food services sector (NAICS 72), the 500-employee rule is applied on a per physical location basis
  • If you are operating as a franchise or receive financial assistance from an approved Small Business Investment Company the normal affiliation rules do not apply

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To evaluate eligibility

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Lenders are directed to consider whether the borrower was in operation before Feb. 15, 2020, and had employees for whom they paid salaries and payroll taxes or paid independent contractors. It must also be determined that:

1. The uncertainty of current economic conditions makes the loan request necessary to support ongoing operations.

2. The borrower will use the loan proceeds to retain workers and maintain payroll or make mortgage, lease and utility payments.

3. The borrower does not have an application pending for a loan duplicative of the purpose and amounts applied for.

4. From Feb. 15, 2020 to Dec. 31, 2020, the borrower has not received a loan duplicative of the purpose and amounts applied for. (Note: There is an opportunity to fold emergency loans made between Jan. 31, 2020 and the date this loan program becomes available into a new loan).

If you are an independent contractor, sole proprietor, or self-employed individual, lenders will also be looking for certain documents such as payroll tax filings, Forms 1099-MISC, and income and expenses from the sole proprietorship.

What lenders won’t look for:

  • That the borrower sought and was unable to obtain credit elsewhere.
  • A personal guarantee is not required for the loan.
  • No collateral is required for the loan.

How much can be borrowed:

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Loans can be up to 2.5 times the borrower’s average monthly payroll costs, not to exceed $10 million.

Will this loan be forgiven?

Borrowers are eligible to have loans forgiven, equal to the amount the borrower spent on the following items during the eight-week period beginning on the loan origination date:

  • Payroll costs.
  • Interest on the mortgage obligation for a business.
  • Rent on a leasing agreement.
  • Payments on utilities.
  • For borrowers with tipped employees, additional wages paid to those employees..

How much of my loan will be forgiven?

If you keep all of your employees at their current base pay, the entirety of the loan will be forgiven. If you still lay off employees, the forgiveness will be reduced by the percent decrease in the number of employees. If your total payroll expenses on workers making less than $100,000 annually decreases by more than 25%, loan forgiveness will be reduced by the same amount. If you have already laid off some employees, you can still be forgiven for the full amount of your payroll cost if you rehire your employees by June 30, 2020.

When is the application deadline?

Applicants are eligible to apply for the PPP loan until June 30, 2020.

Where can I apply for the PPP?

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At any lending institution that is approved to participate in the program through the existing SBA 7(a) lending program and additional lenders approved by the Department of Treasury.

For more information and to get an application form, go to the Treasury website at https://home.treasury.gov/ and click on the paycheck protection loans link at the top of the home page.

Helmut Schmidt is a reporter for The Forum of Fargo-Moorhead's business news team. Readers can reach him by email at hschmidt@forumcomm.com, or by calling (701) 241-5583.
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