The Small Business Administration Paycheck Protection Program

For more information, please visit esd.ny.gov

PAYCHECK PROTECTION

PROGRAM (PPP)

As part of the Coronavirus Aid, Relief, and Economic

Security Act (CARES Act), the Paycheck

Protection Program (PPP) provides $649 billion of

loan funds to support small businesses and other

eligible entities impacted by COVID-19 to pay

workers, interest on mortgage obligations, rent,

insurance, paid sick or medical leave, utilities, and

payroll related costs incurred from February 15, 2020

– December 31, 2020.

• Eligible applicants can apply for a PPP loan, up

to a maximum of $10 million, from participating

lenders. Loan amounts are based 2.5 times

monthly average payroll costs.

• Up to twenty-four weeks of eligible expenses

during the covered period can be forgiven from

the loan principal provided at least 60% of the

proceeds are used for payroll expenses..

• PPP loan repayments will be deferred until the

forgiveness amount has been remitted to the

lender by the SBA.

• Interest rates associated with PPP loans will be

at a maximum 1% per annum.

• There will be no fees for borrowers to apply.

• There are not collateral requirements or personal

guarantees for the loan.

• SBA credit elsewhere test does not apply to this

loan.

• All PPP loans are federally guaranteed by the

SBA 100%.

• Lenders will be able to take applications starting

on April 3, 2020.

• Application form can be found at:

https://home.treasury.gov/system/files/136/Paych

eck-Protection-Program-Application-3-30-2020-

v3.pdf

When can I apply for PPP?

• Starting on April 3, lenders will start accepting

applications and loans can be made until June

30, 2020.

Who is eligible and can apply for PPP?

• A small business with less than 500 employees

(or a business in an industry that has an

employee-based size standard through SBA that

is higher than 500 employees); or

- The SBA size standards show by NAICS

code for each type of business:

https://www.sba.gov/size-standards

• 501(c)(3) nonprofit with less than 500 employees;

• 501(c)(19) veteran’s organization with less than

500 employees; or

• Tribal business concern described in section

31(b)(2)(C) of the Small Business Act with less

than 500 employees; or

• A restaurant, hotel, or a business that falls within

the North American Industry Classification

System (NAICS) code 72, “Accommodation and

Food Services,” and each of the locations has

less than 500 employees; or

• Businesses in the hospitality and restaurant

industries, franchises that are approved on the

SBA’s Franchise Directory; or

• Businesses with financial assistance from Small

Business Investment Company (SBIC) program;

• Sole-proprietors, independent contractors, and

other self-employed individuals.

How long will this program last?

• Although the program is open until June 30,

2020, we encourage you to apply as quickly as

you can because there is a funding limit on the

program.

What are eligible expenses under PPP?

• Payroll costs (see question below for more

details), including benefits; and

• Interest on mortgage obligations (not principal)

incurred before February 15, 2020; and

The Small Business

Administration Paycheck

Protection Program

(including revisions)

Frequently Asked Questions as of June 5, 2020

For more information, please visit esd.ny.gov

• Rent, under lease agreements in force before

February 15, 2020; and

• Utilities, for which service began before February

15, 2020.

What is included in Payroll Costs?

• Salary;

• Wages;

• Commissions or tips (capped at $100,000 on an

annualized basis for each employee);

• Employee benefits including: 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; and

• 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

What costs are not eligible for payroll?

• Employee/owner compensation over $100,000.

• Taxes imposed or withheld under chapters 21,

22, and 24 of the IRS code.

• Compensation of employees whose principal

place of residence is outside of the U.S.

• Qualified sick and family leave for which a credit

is allowed under sections 7001 and 7003 of the

Families First Coronavirus Response Act.

Do I have to be operational to apply?

• Yes, entities must have been operational by

February 15, 2020 and had payroll and paid

taxes.

Where can I apply for PPP loan?

• All current SBA 7(a) are eligible lenders for PPP.

• You should consult with your local lender as to

whether it is participating.

• The list of lenders can be found on

https://www.sba.gov/paycheckprotection/find

• Additional lenders with sufficient qualifications

are will be added by SBA and the U.S.

Department of the Treasury.

• You do not have to visit any government

institution to apply for the program.

How do I apply for PPP Loan?

• You will need to fill out the Paycheck Protection

Borrower Application Form (SBA Form 2483).

• Provide documentation with required

documentation of payroll to an approved lender.

The form can be found at:

https://home.treasury.gov/system/files/136/Paycheck

-Protection-Program-Application-3-30-2020-v3.pdf

What is the required documentation that I

need to provide?

• You will need to provide your lender with payroll

documentation.

Who approves my PPP loan?

• The lender will approve your loan application.

What is the time period covered under

the PPP?

• The covered loan period is from February 15,

2020 to December 31, 2020.

What is the maximum loan amount under

the PPP?

• The maximum loan amount is up to $10 million.

• There is a formula to determine the loan amount

that is related to payroll costs incurred by the

business.

How is the loan size determined?

• Depending on your business’s situation, the loan

size will be calculated in different ways (see

below). The maximum loan amount is $10

million.

- For most business, the formula is based on

2.5 times your average monthly costs minus

exclusion based on the previous 12 months.

- If your business employs seasonal workers,

you can opt to choose March 1, 2019 as your

time period start date.

- If you were not in business between February

15, 2019 – June 30, 2019: Your max loan is

equal to 2.5 times your average monthly

For more information, please visit esd.ny.gov

payroll costs between January 1, 2020 and

February 29, 2020.

- If you took out an Economic Injury Disaster

Loan (EIDL) between February 15, 2020 and

April 3, 2020 and can refinance that EIDL

loan amount into a PPP loan. You would add

the outstanding loan amount to the payroll

sum minus EIDL grant.

What fees will I need to pay in order to apply

for PPP?

• PPP waives borrower and lender fees payable to

SBA.

Can I still apply for PPP if I can obtain credit

elsewhere?

• Yes. Credit elsewhere requirements are waived

for this PPP.

What certifications will I need to provide in

order to apply for PPP?

• Borrow must certify in good faith that funds are

needed for COVID-19 related purposes, that the

funds will be used to retain workers, and that

their request is not duplicative with other SBA

funds for the same purpose.

• Other certifications are included in the borrower

application:

https://home.treasury.gov/system/files

/136/Paycheck-Protection-Program-Application-

3-30-2020-v3.pdf

Is there a collateral or personal guarantee

requirement for PPP?

• No. Both collateral and personal guarantees are

waived.

What is the interest on PPP loans?

• Interest rate will be 1% per annum.

What is the maturity of PPP loans?

• PPP loans issued prior to June 5, 2020 will

mature in 2 years. Loans issued after June 5,

2020 will mature in a minimum of 5 years and a

maximum of 10 years, depending upon the loan

and lender.

Is there a prepayment penalty or fee on PPP?

• No. There are no prepayment fees or penalty.

Are there deferred payments allowed under

PPP?

• Loan payments will be deferred from the

beginning date of the loan until the SBA remits

the forgiveness amount to the lender. Interest will

still accrue during the deferment on the

unforgiven portion of the loan.

Can I get more than one PPP loan?

• No, an entity is limited to one PPP loan. Each

loan will be registered under a Taxpayer

Identification Number at SBA to prevent multiple

loans to the same entity.

Is any portion of the PPP loan forgivable?

• Yes. Amount spent by borrower in the first 24

weeks for allowable expenses from loan date (or

until December 31, 2020 whichever comes first)

will be forgiven with appropriate documentation

provided to the lender.

• Amount maybe reduced proportionately by the

reductions in workforce as compared to the

previous year (see FTE Reduction Exemptions).

• There is 40% limitation for forgiveness on non-

payroll costs. At least 60% of the loan MUST be

for used for payroll costs to receive ANY

forgiveness.

How much is the loan guarantee provided by

SBA to lenders under the Program?

• 100% loan guarantee.

What happens to my PPP loan after

December 31, 2020?

• Borrowers have up to ten months after the end of

their deferral period to apply for forgiveness.

• Anything not forgiven or repaid will convert to a

1% per annum loan for 2-year term for loans

closed before June 5, 2020. Loans closed after

June 5, 2020 will continue for a minimum of 5

years from closing date up to a maximum of 10

years depending upon loan terms.

For more information, please visit esd.ny.gov

How does the PPP loan coordinate with

SBA’s existing loans?

• Borrowers may apply for PPP loans and other

SBA financial assistance, including Economic

Injury Disaster Loans (EIDLs), 7(a) loans, 504

loans, and microloans, and also receive

investment capital from Small Business

Investment Corporations (SBICs).

• However, you cannot use your PPP loan for the

same purpose as your other SBA loan(s). For

example, if you use your PPP to cover payroll for

the 24-week covered period, you cannot use a

different SBA loan product for payroll for those

same costs in that period, although you could

use it for payroll not during that period or for

different workers.

Are eligible businesses owned by directors

or shareholders of a PPP Lender permitted to

apply for a PPP Loan through the Lender

with which they are associated?

• Yes, an outside director or holder of a less than

30 percent equity interest in a PPP Lender can

obtain a PPP loan from the PPP Lender on

whose board the director serves or in which the

equity owner holds an interest, provided that the

eligible business owned by the director or equity

holder follows the same process as any similarly

situated customer or account holder of the

Lender.

Are businesses that receive revenue from

legal gaming eligible for a PPP Loan?

• Yes, if its receipt of business legal gaming

revenues (net of payouts but not other

expenses) did not exceed $1 million in

2019; and

• Legal gaming revenue (net of payouts but

not other expenses) comprised less than

50 percent of the business’s total revenue

in 2019.

• Businesses that received illegal gaming

revenue are categorically ineligible.

My small business is a seasonal business

whose activity increases from April to June.

However, my small business was not fully

ramped up on February 15, 2020. Am I still

eligible?

• Yes, a lender may consider whether a

seasonal borrower was in operation on

February 15, 2020 or for an 8-week period

between February 15, 2019 and June 30,

2019 when deciding eligibility of the borrower.

I pleaded guilty to a felony crime a very long

time ago. Am I still eligible for the PPP?

• Yes. Businesses are only ineligible if an

owner of 20 percent or more of the equity of

the applicant is presently incarcerated, on

probation, on parole; subject to an indictment,

criminal information, arraignment, or other

means by which formal criminal charges are

brought in any jurisdiction; or, within the last

five years, for any felony, has been convicted;

pleaded guilty; pleaded nolo contendere;

been placed on pretrial diversion; or been

placed on any form of parole or probation

(including probation before judgment).

Should payments made to an independent

contractor or sole proprietor be included in

calculations of payroll costs?

• No. Any amounts that has paid to an

independent contractor or sole proprietor

should be excluded from the eligible

business’s payroll costs.

• An independent contractor or sole proprietor

will itself be eligible for a loan under the PPP,

if it satisfies the applicable requirements.

Am I eligible for a PPP Loan if I am self-

employed and file a Form 1040, Schedule C?

• You are eligible for a PPP loan if:

- You were in operation on February 15, 2020;

For more information, please visit esd.ny.gov

- You are an individual with self-employment

income (such as an independent contractor

or a sole proprietor);

- Your principal place of residence is in the

United States; and

- You filed or will file a Form 1040 Schedule C

for 2019.

Are partnerships eligible for PPP loans?

• Yes, partnerships are eligible for PPP loans.

Can I submit for a PPP loan as a self-

employed individual if I am a partner in a

partnership?

• No, you may not submit a separate PPP loan

application for yourself as a self-employed

individual.

• Instead, the self-employment income of general

active partners may be reported as a payroll cost,

up to $100,000 annualized, on a PPP loan

application filed by or on behalf of the

partnership.

Will participating in PPP affect my eligibility

for state administered unemployment

compensation or unemployment assistance

programs?

• Yes, it may affect your eligibility for these

programs, including programs authorized by Title

II, Subtitle A of the CARES Act, or CARES Act

Employee Retention Credits.

Can I apply to PPP if I was not in operation in

2019, but were in operation on February 15,

2020 and will file a Form 1040 Schedule C for

2020?

• Stay tuned. SBA will issue additional guidance

for you if you are in this situation.

How do I calculate the maximum amount I

can borrow for PPP if I have no employees

but file Form 1040, Schedule C? *

• If you have no employees, the following

methodology should be used to calculate your

maximum loan amount:

- Step 1: Find your 2019 IRS Form 1040

Schedule C line 31 net profit amount (if you

have not yet filed a 2019 return, fill it out and

compute the value).

 If this amount is over $100,000, reduce it

to $100,000. If this amount is zero or

less, you are not eligible for a PPP loan.

- Step 2: Calculate the average monthly net

profit amount:

 Divide the amount from Step 1 by 12.

- Step 3: Multiply the average monthly net

profit amount from Step 2 by 2.5.

- Step 4: Add the outstanding amount of any

Economic Injury Disaster Loan (EIDL) made

between January 31, 2020 and April 3, 2020

that you seek to refinance, less the amount of

any advance under an EIDL COVID-19 loan

(because it does not have to be repaid).

What documentation is required for PPP,

if I have no employees, file Form 1040,

Schedule C?

• Regardless of whether you have filed a 2019 tax

return with the IRS, you must provide:

- 2019 Form 1040 Schedule C with your PPP

loan application to substantiate the applied-

for PPP loan amount and

- 2019 IRS Form 1099-MISC detailing

nonemployee compensation received (box 7),

- Invoice, bank statement, or book of record

that establishes you are self-employed.

- You must provide a 2020 invoice, bank

statement, or book of record to establish you

were in operation on or around February 15,

2020.

For more information, please visit esd.ny.gov

How do I calculate the maximum amount I

can borrow for PPP if I have employees, file

Form 1040, Schedule C? **

• If you have employees, the following

methodology should be used to calculate your

maximum loan amount:

- Step 1: Compute 2019 payroll by adding the

following:

 Your 2019 Form 1040 Schedule C line 31

net profit amount (if you have not yet filed

a 2019 return, fill it out and compute the

value), up to $100,000 annualized.

o If this amount is over $100,000,

reduce it to $100,000,

o If this amount is less than zero, set

this amount at zero;

 Your 2019 gross wages and tips paid to

your employees whose principal place of

residence is in the United States

computed using 2019 IRS Form 941

Taxable Medicare wages & tips (line 5c-

column 1) from each quarter plus any pre-

tax employee contributions for health

insurance or other fringe benefits

excluded from Taxable Medicare wages &

tips;

o Subtract any amounts paid to any

individual employee in excess of

$100,000 annualized and

o Subtract any amounts paid to any

employee whose principal place of

residence is outside the United

States.

 2019 employer health insurance

contributions (health insurance

component of Form 1040 Schedule C line

14);

 Retirement contributions (Form 1040

Schedule C line 19);

 State and local taxes assessed on

employee compensation (primarily under

state laws commonly referred to as the

State Unemployment Tax Act or SUTA

from state quarterly wage reporting

forms).

- Step 2: Calculate the average monthly

amount:

 divide the amount from Step 1 by 12.

- Step 3: Multiply the average monthly amount

from Step 2 by 2.5.

- Step 4: Add the outstanding amount of any

EIDL made between January 31, 2020 and

April 3, 2020 that you seek to refinance, less

the amount of any advance under an EIDL

COVID-19 loan (because it does not have to

be repaid).

What documentation is required for PPP

loan, if I have employees, file Form 1040,

Schedule C?

• You must supply:

- Your 2019 Form 1040 Schedule C, Form 941

(or other tax forms or equivalent payroll

processor records containing similar

information);

- Your state quarterly wage unemployment

insurance tax reporting forms from each

quarter in 2019 or equivalent payroll

processor records;

- Evidence of any retirement and health

insurance contributions, if applicable;

- A payroll statement or similar documentation

from the pay period that covered February

15, 2020 must be provided to establish you

were in operation on February 15, 2020.

How can PPP loans be used by individuals

with income from self-employment who file a

2019 Form 1040, Schedule C?

• The proceeds of a PPP loan are to be used for

the following:

- Owner compensation replacement calculated

based on 2019 net profit as described in

“Question*” and “Question**” above.

For more information, please visit esd.ny.gov

- Employee payroll costs for employees whose

principal place of residence is in the United

States, if you have employees.

- Mortgage interest payments (but not

mortgage prepayments or principal

payments) on any business mortgage

obligation on real or personal property,

- Business rent payments

- Business utility payments

 You must have claimed or be entitled to

claim a deduction for such expenses on

your 2019 Form 1040 Schedule C for

them to be a permissible use during the

eight-week period following the first

disbursement of the loan

- Interest payments on any other debt

obligations that were incurred before

February 15, 2020 (such amounts are not

eligible for PPP loan forgiveness).

- Refinancing an SBA EIDL loan made

between January 31, 2020 and April 3, 2020

(maturity will be reset to PPP’s maturity of

two years).

 If you received an SBA EIDL loan from

January 31, 2020 through April 3, 2020,

you can apply for a PPP loan.

 If your EIDL loan was not used for payroll

costs, it does not affect your eligibility for

a PPP loan.

 If your EIDL loan was used for payroll

costs, your PPP loan must be used to

refinance your EIDL loan.

o Proceeds from any advance up to

$10,000 on the EIDL loan will be

deducted from the loan forgiveness

amount on the PPP loan.

• Self-employed individuals will need to rely on

their 2019 Form 1040 Schedule C, which

provides verifiable documentation on expenses

between January 1, 2019 and December 31,

2019.

• For individuals with income from self-employment

from 2019 for which they have filed or will file a

2019 Form 1040 Schedule C, expenses incurred

between January 1, 2020 and February 14, 2020

may not be considered because of the lack of

verifiable documentation on expenses in this

period.

Are there any other restrictions on how I can

use PPP loan proceeds?

• Yes. At least 60 percent of the PPP loan

proceeds MUST be used for payroll costs. For

purposes of determining the percentage of use of

proceeds for payroll costs (but not for forgiveness

purposes), the amount of any refinanced EIDL

will be included.

For more information, please visit esd.ny.gov

LOAN FORGIVENESS FOR PAYCHECK

PROTECTION PROGRAM (PPP)

The Act establishes that PPP borrowers are eligible

for loan forgiveness equal to the amount spent by

the borrower for allowable expenses during a 24-

week period after the loan date of the PPP loan (or

until December 31, 2020 whichever comes first).

The receive any forgiveness, at least 60% of the loan

proceeds must be used for payroll expenses.

What can be included in the PPP loan

forgiveness amount?

• Payroll costs (see question below for more

details), including benefits;

• Interest on mortgage obligations (not principal)

incurred before February 15, 2020;

• Rent, under lease agreements in force before

February 15, 2020; and

• Utilities, for which service began before February

15, 2020.

What is included in Payroll Costs?

• Salary;

• Wages;

• Commissions or tips (capped at $100,000 on an

annualized basis for each employee);

• Employee benefits including: 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; and

• 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

What is the maximum amount of PPP loan

that can be forgiven?

• The maximum amount that can be forgiven is the

principal amount of the loan and any accrued

interest.

How is PPP loan forgiveness calculated?

• PPP Loan forgiveness equals the sum of payroll

costs incurred during the covered 24-week period

(or from loan closing to December 31, 2020,

whichever comes first) compared to the previous

year or time period, proportionate to maintaining

employees and wages:

- Payroll costs plus any payment of interest on

any mortgage obligation (which shall not

include any prepayment of or payment of

principal on a covered mortgage obligation)

plus any payment on any rent obligation and

any utility payment.

- The amount forgiven will be reduced

proportionally by any reduction in employees

retained compared to the prior year and

reduced by the reduction in pay of any

employee beyond 25 percent of their prior

year compensation (subject to any FTE

reduction exemptions – see FTE Reduction

Exceptions.

- To encourage employers to rehire any

employees who have already been laid off

due to the COVID-19 crisis, borrowers that

re-hire workers previously laid off will not be

penalized for having a reduced payroll at the

beginning of the period. Further, forgiveness

is allowed for additional wages paid to tipped

workers.

• Additional guidance will be provided by the SBA

and U.S Department of the Treasury.

What percentage of my forgiven PPP loan

amount can be used for non-payroll

expenses?

• No more than 40% of the forgiven amount may

be for non-payroll costs. At least 60% of the loan

amount MUST be used for payroll costs to be

eligible for forgiveness.

What proof do I need to submit to my lender

to qualify for PPP loan forgiveness?

• Borrowers will provide documentation to lenders

of their payments during the period such as

payroll records, proof of lease payments, proof of

The Small Business Administration Paycheck Protection Program – Loan Forgiveness

For more information, please visit esd.ny.gov

mortgage interest payments, and proof of utility

payments.

• Proof of payment can be a bank statement or

canceled checks.

• 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.

What are the FTE Reduction Exemptions?

• There is an exemption to the FTE Reduction

calculation, if for the period beginning February

15, 2020 and ending December 31, 2020,

provided the Borrower can document:

- An inability to rehire employees who were

employed as of February 15, 2020, and

- An inability to hire similarly qualified

employees for unfilled positions on or before

December 31, 2020, or

- An inability to return to the same level of

business activity as such business was

operating at before February 15, 2020, due to

compliance with requirements and guidelines

issued by Health and Human Services, CDC

or OSHA during March 1, 2020 to December

31, 2020 related to certain protocols for

responding to

COVID-19.

When will my PPP loan be approved for

forgiveness?

• The borrower must make a request to the lender

for forgiveness by providing documentation of

payments made under the covered period within

10 months after the last day of the covered

period.

• The lender has 60 days to review and approve

the request for forgiveness.

What happens to the portion of my PPP loan

that is not forgiven?

• Any loan amounts not forgiven are carried

forward as an ongoing loan with terms of 2 year

at 1% interest per annum for loans closed prior to

June 5, 2020 and for a term not less than 5 years

and not more than 10 years with 1% interest per

annum for loans closed after June 5, 2020

• 100% loan guarantee remains intact from the

SBA.

What amounts shall be eligible for

forgiveness if I file Form 1040, Schedule C?

• The amount of loan forgiveness can be up to the

full principal amount of the loan plus accrued

interest.

• The actual amount of loan forgiveness will

depend, in part, on the total amount spent over

the covered period on:

- Payroll costs including salary, wages, and

tips, up to $100,000 of annualized pay per

employee (for eight weeks, a maximum of

$15,385 per individual);

- Covered benefits for employees (but not

owners), including health care expenses,

retirement contributions, and state taxes

imposed on employee payroll paid by the

employer (such as unemployment insurance

premiums);

- Owner compensation replacement, calculated

based on 2019 net profit, with forgiveness of

such amounts limited to eight weeks’ worth

(8/52) of 2019 net profit, but excluding any

qualified sick leave equivalent amount for

which a credit is claimed under section 7002

of the Families First Coronavirus Response

Act (FFCRA) (Public Law 116-127) or

qualified family leave equivalent amount for

which a credit is claimed under section 7004

of FFCRA;

- Payments of interest on mortgage obligations

on real or personal property incurred before

February 15, 2020, to the extent they are

deductible on Form 1040 Schedule C

(business mortgage payments);

- Rent payments on lease agreements in force

before February 15, 2020, to the extent they

are deductible on Form 1040 Schedule C

(business rent payments); and

For more information, please visit esd.ny.gov

- Utility payments under service agreements

dated before February 15, 2020 to the extent

they are deductible on Form 1040 Schedule

C (business utility payments).

What documentation should I submit to my

lender with my request for loan forgiveness

if I file Form 1040, Schedule C?

- In addition to the borrower certification required

by Section 1106(e)(3) of the Act, to substantiate

your request for loan forgiveness, if you have

employees:

 you should submit Form 941 and state

quarterly wage unemployment insurance tax

reporting forms or equivalent payroll

processor records that best correspond to the

covered period (with evidence of any

retirement and health insurance

contributions).

- Whether or not you have employees, you must

submit evidence of:

 Business rent;

 Business mortgage interest payments on real

or personal property, or;

 Business utility payments during the covered

period if you used loan proceeds for those

purposes.

- The 2019 Form 1040 Schedule C that was

provided at the time of the PPP loan application

must be used to determine the amount of net

profit allocated to the owner for the eight-week

covered period.