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Paycheck Protection Program Feature Article


O


n March 25, the U.S. Senate passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), a $2 trillion stimulus package designed to provide aid to states, industry and workers during the coronavirus outbreak. On March 27, President Trump signed the Act noting that it is the “single-biggest economic relief package in American history…”


The massive aid package is the


third federal measure targeting the effects of the coronavirus pandemic. This economic stimulus package is designed to address


the needs of companies during the COVID-19 pandemic and can prove to be of value to many Investment Casting Institute Members. A key aspect of the CARES Act is the Paycheck Protection Program (PPP) which affords companies the opportunity to borrow funds to address certain operating costs for a period of eight weeks with loan forgiveness at the end of that period. To better enhance your understanding of the PPP, please review the following Frequently Asked Questions: Where can I apply for the Paycheck Protection Program? You can apply for the Paycheck Protection Program (PPP) that


at any lending institution is approved to participate


in the program through the existing U.S. Small Business Administration (SBA) 7(a) lending program and additional lenders approved by the Department of Treasury. This could be the bank you already use, or a nearby bank. There are thousands of banks that already participate in the SBA’s lending programs, including numerous community banks. You do not have to visit any government institution to apply for the program. You can call your bank or find SBA-approved lenders in your area through SBA’s online tool: https://www.sba.gov/funding-programs/loans/paycheck- protection-program You can call your local Small Business Development


Center. They will provide free assistance and guide you to lenders. https://www.sba.gov/tools/local-assistance/sbdc/ Who is eligible for the loan? You are eligible for a loan if you are a small business that


employs fewer than 500 employees, or if your business is in an industry that has an employee-based size standard through the US Small Business Administration (SBA) that is higher than 500 employees. As an example, Steel Investment Foundries (NAICS Code 331512) has an employee-based size of 1000. If would like to test your company’s eligibility, visit the


SBA website at: https://www.sba.gov/document/support-- table-size-standards


I am an independent contractor, am I eligible? Yes. Sole proprietors, independent contractors, gig


economy workers, and self-employed individuals are all eligible for the Paycheck Protection Program. What is the maximum amount I can borrow? The amount any small business is eligible to borrow is


22 ❘ April 2020 ®


250 percent of their average monthly payroll expenses, up to a total of $10 million. This amount is intended to cover 8 weeks of payroll expenses and any additional amounts for making payments towards debt obligations. This 8 week period may be applied to any time frame between February 15, 2020 and June 30, 2020. Seasonal business expenses will be measured using a 12-week period beginning February 15, 2019, or March 1, 2019, whichever the seasonal employer chooses. How can I use the money such that the loan will be


forgiven? The amount of principal that may be forgiven is equal to the sum of expenses for payroll, and existing interest payments on mortgages, rent payments, leases, and utility service agreements. Payroll costs include employee salaries (up to an annual rate of pay of $100,000), hourly wages and cash tips, paid sick or medical leave, and group health insurance premiums. If you would like to use the Paycheck Protection Program for other business-related expenses, like inventory, you can, but that portion of the loan will not be forgiven. When is the loan forgiven? The loan is forgiven at the end of the 8-week period after


you take out the loan. Borrowers will work with lenders to verify covered expenses and the proper amount of forgiveness. What is the covered period of the loan? The covered period during which expenses can be forgiven extends from February 15, 2020 to June 30, 2020. Borrowers can choose which 8 weeks they want to count towards the covered period, which can start as early as February 15, 2020. How much of my loan will be forgiven? The purpose of the Paycheck Protection Program is to help


you retain your employees, at their current base pay. If you keep all of your employees, the entirety of the loan will be forgiven. If you still lay off employees, the forgiveness will be reduced by the percent decrease in the number of employees. If your total payroll expenses on workers making less than $100,000 annually decreases by more than 25 percent, loan forgiveness will be reduced by the same amount. If you have already laid off some employees, you can still be forgiven for the full amount of your payroll cost if you rehire your employees by June 30, 2020.


amount?


Am I responsible for interest on the forgiven loan No, if the full principal of the PPP loan is forgiven, the


borrower is not responsible for the interest accrued in the 8-week covered period. The remainder of the loan that is not forgiven will operate according to the loan terms agreed upon by you and the lender. What are the interest rate and terms for the loan amount that is not forgiven? The terms of the loan not forgiven may differ on a case-by-


case basis. However, the maximum terms of the loan feature a 10-year term with interest capped at 4 percent and a 100


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