the cares act: paycheck protection program …2020/04/01 · cares act •$500b corporate liquidity...

The CARES Act: Paycheck Protection Program Overview

April 1, 2020

For Informational Purposes Only; Subject to Change

Introduction

Greater New Orleans, Inc.• Michael Hecht, President & CEO• Ileana Ledet, Vice President of Policy

Gulf Coast Bank & Trust• Guy Williams, President & CEO• Nimi Natan, Small Business Lending

Jones Walker• Marshall Page, Partner • Elisabeth LeBlanc, Corporate Practice Group

Butterworth Strategies• Zach Butterworth, Attorney

Who We Are

2For Informational Purposes Only; Subject to Change

Submit Questions

EMAIL: Ileana Ledet - [email protected]


Greater New Orleans, Inc.

• Regional economic development organization for ten parishes of southeast Louisiana

• Business development & business environment

• Advance policies at regional, state & federal levels

Who We Are


CARES Act

• $500B Corporate Liquidity Fund

• $150B State Stabilization Fund

• $1,200+ Individual Financial Assistance

• Enhanced Unemployment Insurance

• And more…

Key Elements


Paycheck Protection Program

• The loans are made by private, local banks and CDFIs, not the SBA – ensuring speed

• The loans, if used on payroll and other operating expenses, are forgivable

Why Is This Different?



• Businesses, 501(c)(3)s

• Self-employed, independent contractors, sole proprietors

• 501(c)(19) veterans organization

• Less than 500 employees (or meet SBA “small” definition)

• Food & accommodation sectors (NAICS 72) size standard applied per location

Eligibility



1. Average monthly payroll costs over last 12 months, including:• Salaries, wages, commissions, tips• Vacation, sick, medical leave paid• Group health care benefits, including insurance

premiums• Retirement benefits• State or local tax on employee pay

2. Multiply by 2.5 (i.e. 2 ½ months gross payroll)

3. Capped at $10M

Calculating Loan Amount



You CANNOT include:• Salary amount exceeding $100,000• Pay to employee living outside U.S.• Qualified sick leave already being credited

through Families First Act• Payroll taxes, income taxes or railroad retirement

Calculating Loan Amount



• Payroll and benefit costs

• Rent or interest on mortgage payments

• Utilities (electricity, water, internet, phone)

• Paid sick, medical, family leave (except duplication of benefits)

• Interest on existing debt

Eligible Uses for the Loan



• Forgiveness allowed for business expenses over 8-week period

• Includes: payroll & benefits, interest on existing mortgage debt, rent & utilities

• Amount of forgiveness reduced for employee reductions compared to prior year, or if salaries and wages decrease

• Borrowers that rehire workers previously laid off won’t be penalized for having smaller payroll at beginning of period

Loan Forgiveness

For Informational Purposes Only; Subject to Change 11


• Most banks and credit unions

• 100% guaranteed by SBA

• No collateral required by SBA; may be by bank

• Borrower will not have to prove they could not obtain credit elsewhere

• Interest rate of .50%; 2-year term

Application Process



• April 3: Small businesses and sole proprietorships can begin applying

• April 10: Independent contractors and self-employed can begin applying

• June 30: Last day for loans to be funded

Application Process



• Completed application • Articles of incorporation/Org.• Bylaws/operating agreement• Owners’ driver’s licenses• Payroll expense verification• Trailing 12-month profit and loss statement and

balance sheet• Detailed debt schedule• Most recent tax filings, mortgage/rent statements,

utility bills

Loan Process - Documentation


Paycheck Protection Program (PPP)PPP vs Economic Injury Disaster Loan (EIDL)

Type of Loan Program

Administration (who provides

the funds)

Terms of Payback

Maximum Loan Amount


(PPP)

Private Banks (SBA 100% guaranteed)

• 2 years• 0.50% int.• Portion

forgivable

$10M Max

Standard SBA 7(a) Loan

Private Banks(SBA 75%guaranteed for loans > $150k)

• 5-10 years• ~5-8% int.• Paid in full

$5M Max

Economic Injury Disaster

Loan(EIDL)

SBA • 30 years• 3.75% int.• Paid in full

$2M Max


Submit Questions


EMAIL: Ileana Ledet - [email protected]


• I’m getting an SBA Economic Injury Disaster Loan - am I also eligible for this? Yes, you can obtain and retain both EIDL and PPP loans if they are used for different purposes.

• If I get an EIDL and a PPP loan, can I still get another loan?Only one PPP loan can be taken out; other SBA loans, and non-SBA loans are available

Frequently Asked Questions



• What type of documentation will I need to submit to have my loan forgiven?Lenders want to see proof that workers were paid in the 8 weeks after loan origination.

• If my loan is not forgiven, when do I need to start paying off my loan? All payments are deferred 6 months; however interest will accrue over this period.




• What if I want to pay the same employees, but reduce their number of hours? There’s a formula that reduces loan forgiveness based on the wages reduced.

• What types of employees can I include in my loan calculation – only full-time, or PT also? How about 1099 employees?You include all employees – FT and PT; include both W2 and 1099 workers




• Am I eligible if my business began in 2020?Yes. Your Jan. & Feb. 2020 payroll costs will be used to calculate your loan amount.

• Which 12 months of payroll should I use when calculating my loan amount?You should use the trailing 12 months of payroll (if you file an application in April, use payroll through March 2020)




• How do the affiliation rules work in calculating number of employees?Affiliation rules are waived for businesses operating as a franchise with a NAICS 72 code (Hospitality). Typical SBA 7(a) affiliation tests for others.

• How does a sole proprietor calculate payroll if I’m the only employee?You would use your own income or net earnings.



Thank You!

Additional Resources at gnoinc.org/coronavirus

the cares act: paycheck protection program …2020/04/01 · cares act •$500b corporate liquidity...

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