The Coronavirus Aid, Relief and Economic Security (CARES) Act expands the Small Business Administration’s (SBA) 7(a) loan program to include nearly $670 billion for a small business program called the Payroll Protection Program.
The Paycheck Protection Program is not provided through SBA directly, so the first step to qualifying for a loan through the Paycheck Protection Program is to find an SBA approved lender in your community. If your bank is not an SBA lender, you can find one using SBA's find-a-lender tool.
Note: The SBA is currently not accepting new EIDL applications; however, NAHB will be fighting for additional funding in the next congressional stimulus package.
- Small and medium sized businesses with fewer than 500 employees;
- Nonprofits with fewer than 500 employees;
- 501(c)(3) organizations (this is a tax-exempt designation conferred by the IRS based on the operations of the organization);
- 501(c)(19) tax-exempt veterans organizations;
- Sole proprietors;>
- Self-employed individuals; and
- Independent contractors who typically receive 1099s.
- Payroll costs — must account for 60% of your costs under the program;
- Certain costs related to the continuation of group health care benefits;
- Employee salaries (including commissions);
- Mortgage, rent and utilities payments; and
- Interest on any other debt obligations that were incurred before the covered period.
No. The exclusion of compensation in excess of $100,000 annually applies only to cash compensation, not to non-cash benefits, including:
- Employer contributions to defined-benefit or defined-contribution retirement plans;
- Payment for the provision of employee benefits consisting of group health care coverage, including insurance premiums; and
- Payment of state and local taxes assessed on compensation of employees.
In evaluating a borrower's eligibility, a lender may consider whether a seasonal borrower was in operation on Feb. 15, 2020, or for an eight-week period between Feb. 15, 2019, and June 30, 2019.
SBA recognizes that eligible borrowers that use PEOs or similar payroll providers are required under some state registration laws to report wage and other data on the Employer Identification Number (EIN) of the PEO or other payroll provider. In these cases, payroll documentation provided by the payroll provider that indicates the amount of wages and payroll taxes reported to the IRS by the payroll provider for the borrower’s employees will be considered acceptable PPP loan payroll documentation. Relevant information from a Schedule R (Form 941), Allocation Schedule for Aggregate Form 941 Filers, attached to the PEO’s or other payroll provider’s Form 941, Employer’s Quarterly Federal Tax Return, should be used if it is available; otherwise, the eligible borrower should obtain a statement from the payroll provider documenting the amount of wages and payroll taxes. In addition, employees of the eligible borrower will not be considered employees of the eligible borrower’s payroll provider or PEO.
No. Any amounts that an eligible borrower has paid to an independent contractor or sole proprietor should be excluded from the eligible business's payroll costs. However, an independent contractor or sole proprietor will itself be eligible for a loan under the PPP, if it satisfies the applicable requirements.
1% fixed rate
The CARES Act allows businesses to take out loans equal to 2.5 times their average monthly payroll from 2019 with the total capped at $10 million. Payroll figures include salary and wages, health care benefits and paid sick leave.
In general, borrowers can calculate their aggregate payroll costs using data either from the previous 12 months or from calendar year 2019. For seasonal businesses, the applicant may use average monthly payroll for the period between Feb. 15, 2019, or March 1, 2019, and June 30, 2019. An applicant that was not in business from Feb. 15, 2019, to June 30, 2019, may use the average monthly payroll costs for the period Jan. 1, 2020, through Feb. 29, 2020.
Borrowers may use their average employment over the same time periods to determine their number of employees, for the purposes of applying an employee-based size standard. Alternatively, borrowers may elect to use SBA's usual calculation: the average number of employees per pay period in the 12 completed calendar months prior to the date of the loan application (or the average number of employees for each of the pay periods that the business has been operational, if it has not been operational for 12 months).
This program is not provided through SBA directly, so the first step to qualifying for a PPP loan is to find an SBA approved lender in your community. Your lender can guide you through the application process.
To find an SBA lender in your community, click here. You can also contact the national SBA office at 1-877-475-2435 or email firstname.lastname@example.org. If you are having trouble getting through to, or getting your questions answered by, the SBA, please submit this form, and NAHB staff will follow up and provide additional guidance as needed.
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 August 8, 2020. Click here for the application.
You will also need to provide your lender with payroll documentation.
NOTE: NAHB is providing this information for general information only. This information does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind nor should it be construed as such.