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Can The Paycheck Protection Program Help You?

Can the Paycheck Protection Program help you?

Updated July 7, 2020, at 6:00 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: Paycheck Protection Program reopened

You now have more time to apply for a PPP loan. The program’s application deadline was extended from June 30 to Aug. 8.

The program resumed July 6 after the president signed the program’s extension legislation.

Dupaco is now processing PPP loan applications again.

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 important to think carefully about what’s in your best interest—repaying the loan or applying for forgiveness.

Learn more about the forgiveness guidelines and what to expect if you choose to apply.

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

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