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COVID-19 Loan Options

posted on Tuesday, March 31, 2020 in Community News

PAYCHECK PROTECTION PROGRAM 

The Paycheck Protection Program is a relief program to eligible Northwest Bank customers.

The Small Business Administration (SBA) and U.S. Department of the Treasury have created The Paycheck Protection Program to provide customers relief to providing funding to help Americans employed by small businesses toward job retention and certain other expenses.

The Paycheck Protection Program (“PPP”) authorizes up to $349 billion in forgivable loans to
small businesses to pay their employees during the COVID-19 crisis.  This program provides small business customers with funds to pay up to eight weeks of payroll costs including benefits as well as mortgage interest, rent and utilities. 

View full details about the Paycheck Protection Program from the U.S. Treasury Department: 

OVERVIEW

  • Loan Amount: 2.5 x Average Monthly Payroll
  • Terms: Two year loan (at 1.0% fixed rate) with no prepayment penalties or fees
  • Payments: Loan payments will be deferred for six months, interest payments thereafter.  Principal due at maturity. 
  • No collateral or personal guarantees are required
  • Neither government nor lenders will charge small businesses any fees
  • Funds can be used for
    • Payroll costs including benefits
      • Payroll costs are capped at $100,000 on an annualized basis for each employee. Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.
    • Interest on mortgage obligations, incurred before February 15, 2020 
    • Rent, under lease agreements in force by February 15, 2020 
    • Utilities, for which service began before February 15, 2020 

LOAN FORGIVENESS

Funds are provided in the form of loans that maybe forgiven based on the employer: 

  • Keeping employees on the payroll or quickly rehiring employees and maintaining salary levels.  If full-time headcount declines, or if salaries and wages decrease then forgiveness will be reduced. 
  • Using the funds to cover payroll costs, interest on mortgages, rent and utilities 
  • At least 75% of the forgiven amount must be used to cover payroll
    • Payroll costs are capped at $100,000 on an annual basis for each employee

Request loan forgiveness by submitting a request to Northwest Bank. The request needs to include documents that verify the number of full-time equivalent employees and pay rates, as well as the payments on eligible mortgage, lease, and utility obligations. You must certify that the documents are true and that you used the forgiveness amount to keep employees and make eligible mortgage interest, rent, and utility payments.  Northwest Bank must make a decision on the forgiveness within 60 days. 

*Details and guidelines on the Paycheck Protection Program are established by the SBA.  Northwest Bank is not responsible for creating the terms, details or guidelines. 

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WHO IS ELIGIBLE

  • Small Businesses with 500 or Fewer Employees 
    •  Businesses with more than 500 employees are eligible in certain industries - Click Here for more detail.
  • Eligible Nonprofit Organizations
  • Veterans Organizations
  • Tribal Concerns
  • Self-Employed Individuals
  • Sole Proprietorships
  • Independent Contractors

For this program, the SBA’s affiliation standards are waived for small businesses: 

  • In the hotel and food services industries (Click Here for NAICS code 72 to confirm)
  • That are franchises in the SBA’s Franchise Directory (Click Here to check)
  • That receive financial assistance from small business investment companies licensed by the SBA. Additional guidance may be released as appropriate. 

WHEN CAN YOU APPLY

  • April 3, 2020 | Small Businesses and Sole Proprietorships 
  • April 10, 2020 | Independent Contractors and Self-Employed Individuals 

There is a funding cap, so we encourage you to apply as soon as you can

HOW DO YOU APPLY

Submit the following items to a Northwest Bank Business Banker by June, 30, 2020: 

  • Completed Paycheck Protection Program Application
  • Applicable Documentation of the last 12 months of payroll 

Download The Application 

View full terms of the program at www.sba.gov.  

We are ready to support you though this difficult time. Our offices are operating with limited lobby access to appointments only.  Feel free to contact your Commercial Banker who will assist you.  The Paycheck Protection Program is to eligible Northwest Bank customers.

Request An Appointment Contact A Business Banker

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Frequently Asked Questions

Do I need to look for other funds before applying for Paycheck Protection Program? 

No. The SBA is waiving their usual requirements that you try to obtain some or all the loan funds from other sources (i.e. Credit Elsewhere requirement) 

What is the time frame on this program? 

The program is open until June 30, 2020.  There is a funding cap, so we encourage you to apply as soon as you can. 

How many loans can I take out under this program? 

Only one. 

What can I use the funds from this program for? 

  • Payroll costs (including benefits)
  • Interest on mortgage obligations, incurred before February 15, 2020 
  • Rent, under lease agreements in forced before February 15, 2020 
  • Utilities, for which service began before February 15, 2020 

What is considered a payroll cost? 

  • Salary, wages, commissions, or tips (capped at $100,000 on an annualized basis for each employee) 
  • Employee benefits
    • Costs for vacation, parental, family, medical or sick leave
    • Allowance for separation or dismissal
    • Payments required for the provisions of group health care benefits including insurance premiums
    • Payment of any retirement benefit
  • State and local taxes assessed on compensation
  • Sole proprietor or independent contractor can include: wages, commissions, income or net earnings from self-employed (capped at $100,000 on an annualized basis for each employee) 

How large can my Paycheck Protection Program loan be? 

Loans can be for up to two months of your average monthly payroll costs from the last year plus an additional 25% of that amount.  This amount is subject to a $10 million cap.  Seasonal or new business  will use a different applicable time periods for your calculation. 

Does the Program cover paid sick leave? 

Yes, the Paycheck Protection Program covers payroll costs, which include employee benefits such as costs for parental, family, medical or sick leave.  However, it is worth noting that the CARES Act expressly excludes qualified sick and family leave wages for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act (FFCRA) (Public Law 116–127). Click here to learn more about the FFCRA’s Paid Sick Leave Refundable Credit.

What amount of my loan will be forgiven? 

You will owe money when your loan is due if you use the loan amount for anything other than payroll costs, mortgage interest, rent and utility payments over the eight weeks after getting the loan.  (It is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.) 

Also, you will owe money if you do not maintain your staff and payroll levels.

  • Number of Staff: Your loan forgiveness will be reduced if you decrease your full-time employee headcount. 
  • Level of Payroll: Your loan forgiveness will be reduced if you decrease salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019. 
  • Re-Hiring: You have until June 30, 2020 to restore your full-time employment and salary levels for any changes made between February 15, 2020 and April 26, 2020. 

What will my loan terms look like? 

  • Interest rate: 1.0% fixed rate
  • Due Date of Loan: In 2 years - There are no prepayment penalties or fees
  • Payments: All payments are deferred for 6 months; however interest will continue to accrue over this period. 

Do I need to personally guarantee this loan? 

No. There is no personal guarantee requirement.  However, if the proceeds are used for fraudulent purposes, the U.S. government will pursue criminal charges against you. 

As part of the application, what do I need to certify? 

  • Current economic uncertainty makes the loan necessary to support your ongoing operations.
  • The funds will be used to retain workers and maintain payroll or to make mortgage, lease, and utility payments. 
  • You have not and will not receive another loan under this program. 
  • You will provide to the lender documentation that verifies the number of full-time equivalent employees on payroll and the dollar amounts of payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities for the eight weeks after getting this loan. 
  • Loan forgiveness will be provided for the sum of documented payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities.
    • Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs 
  • All the information you provided in your application and in all supporting documents and forms is true and accurate. Knowingly making a false statement to get a loan under this program is punishable by law.  
  • You acknowledge that the lender will calculate the eligible loan amount using the tax documents you submitted. You affirm that the tax documents are identical to those you submitted to the IRS. And you also understand, acknowledge, and agree that the lender can share the tax information with the SBA’s authorized representatives, including authorized representatives of the SBA Office of Inspector General, for the purpose of compliance with SBA Loan Program Requirements and all SBA reviews.

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