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Can The Paycheck Protection Program Help You?

Can the Paycheck Protection Program help you?

Updated April 24, 2020, at 1:30 p.m. CT

If you’re trying to keep your small business running, know that you don’t have to go it alone. The Paycheck Protection Program was designed to help small businesses like yours keep workers on the payroll during the COVID-19 crisis.

Important update on the Paycheck Protection Program

On Friday, April 24, 2020, President Trump signed a bill that allocates additional funds to the Small Business Association’s (SBA) Paycheck Protection Program (PPP) Loan fund.

Dupaco is still accepting PPP loan applications. Here’s what you need to know:

  • If you haven’t applied yet, we encourage you to do so now. Be sure to submit ALL the required materials. Failure to do so will delay your application, and could prevent you from securing a loan before the funds run out (which we expect to happen quickly).
  • If you already applied, please remain patient. And be sure to provide any additional information your lender has requested as soon as you can.

We’ll process and submit all eligible applications and supporting documents to the SBA when the new funds are officially available.

Have you checked out these other resources for small businesses?

Here’s how the Paycheck Protection Program works

The heavily anticipated program is part of the CARES Act—helping small- and mid-sized businesses with cash flow during this time. The loans might be forgiven if funds are used to keep your employees on the payroll and for certain other expenses.

The $349 billion loan program is backed entirely by the government, but local credit unions (like Dupaco) and banks make and approve the loans.

The program is implemented by the Small Business Administration with support from the U.S. Department of the Treasury.

Who can apply

All small businesses—including nonprofits, veterans organizations, Tribal business concerns, self-employed individuals, sole proprietorships and independent contractors—with 500 or fewer employees can apply.

Companies with more than 500 employees are eligible in certain industries. If your small business is in the hospitality and food industry with more than one location, it may also qualify if your individual sites employ less than 500 workers.

How to apply

Dupaco is still accepting Paycheck Protection Program loan applications. You must be a current Dupaco business member as of April 3, 2020, to apply with the credit union.

You can apply here.

Submitting your application does not guarantee you the loan. Your application is subject to review according to federal and SBA guidelines.

Please read through the application carefully to ensure you are submitting all of the requested documentation. Submitting incomplete information will delay funding and your ability to close on the loan.

How you can use the loan

The Paycheck Protection Program provides your small business with funds to pay up to eight weeks of payroll costs.

What counts as payroll costs?

  • Salary, wages, commissions or tips
  • Employee benefits: Costs for vacation, parental, family, medical or sick leave; allowance for separation or dismissal; payments required for group health care benefits, including insurance premiums; and payment of any retirement benefit
  • State and local taxes assessed on compensation
  • Sole proprietor and independent contractor costs: Wages, commissions, income or net earnings from self-employment

You can also use funds to pay:

  • Interest on mortgage obligations incurred before Feb. 15, 2020
  • Rent under lease agreements in force before Feb. 15, 2020
  • Utilities if the service began before Feb. 15, 2020

How much you can borrow

You can borrow up to two months of your average monthly payroll costs from the last year, plus an additional 25% of that amount, with a $10 million cap.

Payroll costs will be capped at $100,000 annualized for each employee.

What your loan term looks like

The loan has a 1.00% fixed interest rate.

Your payments will be deferred for six months, but interest continues to accrue during this period.

You won’t be charged any fees from the government or your lender. And no collateral or personal guarantees are required.

How your loan is forgiven

Your loan might be forgiven, but it’s based on maintaining (or quickly rehiring) your employees and salary levels.

Forgiveness will be reduced if your full-time headcount declines or if salaries and wages decrease by more than 25% for any employee who made less than $100,000 annualized in 2019.

You have until June 30, 2020, to restore your full-time employment and salary levels for any changes made between Feb. 15 and April 26, 2020.

The loan might be fully forgiven when used for payroll costs, interest on mortgages, rent and utilities. But it’s anticipated that at least 75% of the forgiven amount must have been used for payroll.

You’ll need to submit a request to Dupaco for your loan to be forgiven, providing documentation that verifies how your funds were used. You’ll receive a decision on the forgiveness within 60 days.

Sources: Small Business Administration and the U.S. Department of the Treasury

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