Update - Most recent information on the CARES Act

By Kevin Vogel | FNBCC
Tuesday, March 31, 2020

I wanted to give you an update on the PPP Program as of Tuesday morning, 3/31/20.

We are still waiting for the details on the application, processing, and documentation requirements for the new PPP Program that was recently approved by Congress as part of the CARES Act.  We are still anticipating that this information will be released to banks sometime later this week, with applications expected to begin processing next week.  In the meantime, I wanted to provide you with some additional information to help you understand some of the more specific details of the program.

Eligibility Certification:  As part of the application process, it is our understanding that the Borrower will be asked to certify the following information:

  • That it was in business prior to 2/15/20 and had employees to whom it paid wages.
  • That current economic conditions make the loan request necessary to support ongoing operations.
  • That you will use the proceeds to retain workers, maintain payroll, and make mortgage, lease, and utility payment.
  • That you will not use proceeds from another government provided emergency loan for the same purpose.

Eligible Amount:  The amount of the PPP loan you will be eligible for will be determined by multiplying the Borrower’s “Average Monthly Payroll Costs” by 2.5.  The Average Monthly Payroll Cost is determined by looking at your trailing 12 months of payments for the following:  Salaries, cash tips, payment for vacation/family/sick leave, separation payments, payments of group health benefits including insurance premiums, retirement benefits, and state/local taxes on compensation.  From this amount you must exclude compensation to individuals in excess of $100M, payroll taxes, and compensation for employees that do not live in the U.S.

Forgiveness Amount:  Borrowers will be eligible to have a portion of the PPP loan forgiven equal to the amount spent on the following items in the 8-week period following the closing of the PPP loan:  payroll costs (as defined above), interest on mortgage obligation related to the business, rent paid for business premises, and utility payments.  This number will be reduced if there is a reduction in the number of employees or greater than a 25% reduction in wages paid to employees.  Reductions in employment or wages that occurred from 2/15/20 to late April, 2020 can be offset if the borrower eliminates the reduction by June 30, 2020.

Although we have not yet received a specific list of documents required to obtain the loans, we anticipate that the following documents are most likely going to be required and should help you prepare to begin the application process.

  • Articles of Incorporation/Organization for the business
  • Bylaws/Operating Agreement for the business
  • Payroll expense verification to include the following:
  • IRS Forms 940 and/or 941
  • Payroll summary report with corresponding bank statements for the applicable period or other forms of verification such as pay stubs
  • Evidence of payroll benefits paid (vacation, sick leave, family leave, retirement benefits, healthcare benefits)
  • Trailing 12 months profit and loss statement
  • 1099’s for independent contractors

We will continue to provide additional information as more details become available or you may contact a banking office at the following numbers:  (561) 617-9001 or (954) 697-9790.