Paycheck Protection Program

Proudly participating in the CARES Act to support the small businesses and organizations in our Farm Bureau® family.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed to provide emergency relief for certain businesses, nonprofit organizations and independent contractors disrupted by the current COVID-19 situation. Part of the act is the Paycheck Protection Program, which allows financial institutions to provide federally backed, potentially forgivable loans to eligible businesses.
Updated and effective for applications received beginning 6.5.2020:

How does the program work?
  • The Paycheck Protection Program is a low interest rate loan that may be partially or fully forgiven by the Federal government
  • It is intended to be a stimulus and to provide funds for payroll and mortgage interest or rent and utilities to help businesses during this difficult time
  • It is a 5 year loan at 1% with the first payment deferred for the first six months
  • 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 utilities payments over the 24 weeks after getting the loan
  • Not more than 40% of the forgiven amount may be for non-payroll costs
  • You will also owe money if you do not maintain your staff and payroll
    • Number of staff – your loan forgiveness will be reduced if you decrease your full-time employee headcount
    • The deadline for rehiring employees was pushed back from June 30 to December 31, 2020
Who is eligible?
  • Businesses with 500 or fewer employees, including:
    • business entities – eg. corporations or LLCs
    • sole proprietorships
    • independent contractors (1099-MISC) – eg. real estate agents
    • 501(c)(3) nonprofits
    • veterans’ organizations
    • tribal business concerns
  • Business must be impacted by COVID-19 between February 15, 2020 and June 30, 2020
  • Business may receive only one Paycheck Protection Program loan
 How can I use the loan?
  • Payroll costs, including benefits
  • Interest on mortgages originated before February 15, 2020
  • Rent for lease agreements in force before February 15, 2020
  • Utilities for which service began before February 15, 2020
What is included in payroll costs?
  • Salaries, wages, commissions or tips (capped at $100,000 on an annualized basis for each employee)
  • Employee benefits including costs for vacation, parental, family, medical, sick leave; allowance for separation or dismissal; payments required for the provisions of group health care benefits including insurance premiums; and payment of any retirement benefit
  • State and local taxes assessed on compensation
  • For a sole proprietor or independent contractor: wages, commissions, income, or net earnings from self-employment, capped at $100,000 on an annualized basis for each employee
How much can I borrow?
  • Businesses can borrow a maximum of 2.5 times their average monthly payroll over the prior 12 months
    • Seasonal businesses will be for the payroll period between February 15, 2019 and June 30, 2019 or March 1, 2019 and June 30, 2019 and is the decision of the borrower
  • Loans may not exceed $10 million
See below for examples:
 
Example 1
No employees make $100,000+
  •  Annual payroll: $120,000
  • Average monthly payroll: $10,000
  • Multiply by 2.5 = $25,000
  • Maximum loan amount is $25,000
Example 2
Some employees make $100,000+
  •  Annual payroll: $1,500,000
  • Subtract compensation amounts in excess of an annual salary of $100,000: $1,200,000
  • Average monthly qualifying payroll: $100,000
  • Multiply by 2.5 = $250,000
  • Maximum loan amount is $250,000
Example 3
Independent Contractor*
  •  Annual 1099: $96,000
  • Average monthly 1099: $8,000
  • Multiply by 2.5 = $20,000
  • Maximum loan amount is $20,000
 
*Final guidance from SBA pending
 
What are the terms of the loan?
  • 60 month term loan
  • Fixed interest rate of 1.00%
  • First payment deferred until forgiveness process is complete
  • No personal guarantee required
  • No collateral required
  • No origination fee
  • No prepayment fee
How can I request loan forgiveness?
  • Additional guidance will be forthcoming on the Farm Bureau Bank process
  • Information is available at treasury.gov/cares
 What if I have additional questions?
8.13.2020

There is current legislation pending in Congress - S.4117 (by Senator Cramer) in the final Senate bill and H.R.7777 (by Reps. Houlahan-Upton) in the House bill. These “companion” pieces of legislation would direct SBA to produce a simple one-page attestation by which borrowers may apply for forgiveness of PPP loans of $150,000 or less.

This would make the forgiveness process streamlined and take a significant amount of complexity and time commitment off the plates of business owners. Farm Bureau Bank strongly supports this legislation to help our clients with a streamlined forgiveness process.
 
Until further decisioning is made by Congress, we are NOT accepting forgiveness applications for loans of $150,000 or less. We will continue to provide updates as more guidance is released and details become available from the SBA. We appreciate your patience.