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The CARES Act: Payroll Protection Program Overview
March 30, 2020
Introduction
Greater New Orleans, Inc.• Michael Hecht, President & CEO• Ileana Ledet, Vice President of Policy
Gulf Coast Bank & Trust• Guy Williams, President & CEO• Nimi Natan, Small Business Lending
Jones Walker• Marshall Page, Partner • Elizabeth LeBlanc, Corporate Practice Group
Butterworth Strategies• Zach Butterworth, Attorney
Who We Are
2For Informational Purposes Only; Subject to Change
Submit Questions
EMAIL: Ileana Ledet - [email protected]
3For Informational Purposes Only; Subject to Change
Greater New Orleans, Inc.
• Regional economic development organization for ten parishes of southeast Louisiana
• Business development & business environment
• Advance policies at regional, state & federal levels
Who We Are
4For Informational Purposes Only; Subject to Change
CARES Act
• $500B Corporate Liquidity Fund
• $150B State Stabilization Fund
• $1,200+ Individual Financial Assistance
• Enhanced Unemployment Insurance
• And more…
Key Elements
5For Informational Purposes Only; Subject to Change
Payroll Protection Program
• The loans are made by private, local banks and CDFIs, not the SBA – ensuring speed
• The loans, if used on payroll and other operating expenses, are forgivable
Why Is This Different?
6For Informational Purposes Only; Subject to Change
Payroll Protection Program
• Businesses, self-employed, 501(c)(3)s
• Self-employed, independent contractors, sole proprietors
• 501(c)(19) veterans organization
• Less than 500 employees (or meet SBA “small” definition)
• Food & accommodation sectors (NAICS 72) size standard applied per location
Eligibility
7For Informational Purposes Only; Subject to Change
Payroll Protection Program
1. Average monthly payroll costs over last 12 months, including:• Salaries, wages, commissions, tips• Vacation, sick, medical leave paid• Group health care benefits, including insurance
premiums• Retirement benefits• State or local tax on employee pay
2. Multiply by 2.5 (i.e. 2 ½ months gross payroll)
3. Capped at $10M
Calculating Loan Amount
8For Informational Purposes Only; Subject to Change
Payroll Protection Program
You CANNOT include:• Salary amount exceeding $100,000• Pay to employee living outside U.S.• Qualified sick leave already being credited
through Families First Act• Payroll taxes, income taxes or railroad retirement
Calculating Loan Amount
9For Informational Purposes Only; Subject to Change
Payroll Protection Program
• Payroll and benefit costs
• Rent or mortgage payments
• Utilities (electricity, water, internet, phone)
• Paid sick, medical, family leave (except duplication of benefits)
• Interest on existing debt
Eligible Uses for the Loan
10For Informational Purposes Only; Subject to Change
Payroll Protection Program
• Forgiveness allowed for business expenses over 8-week period
• Includes: payroll & benefits, interest on existing debt, mortgage/rent & utilities
• Amount of forgiveness reduced for employee reductions compared to prior year
• Borrowers that rehire workers previously laid off won’t be penalized for having smaller payroll at beginning of period
Loan Forgiveness
For Informational Purposes Only; Subject to Change 11
Payroll Protection Program
• Most banks and credit unions
• 100% guaranteed by SBA
• No collateral required by SBA; may be by bank
• Borrower will not have to prove they could not obtain credit elsewhere
• Interest rate capped at 4%; 10-year max. term
Application Process
12For Informational Purposes Only; Subject to Change
Payroll Protection Program
• TBD
• TBD
• TBD
Loan Process
13For Informational Purposes Only; Subject to Change
Payroll Protection ProgramPPP vs Economic Injury Disaster Loan (EIDL)
Type of Loan Program
Administration Terms of Payback
Maximum Loan Amount
PPP Private Banks (SBA guaranteed)
• 10 years• 4% int.• Portion
forgivable
$10M Max
EIDL SBA • 30 years• 3.75% int.• Paid in full
$2M Max
14For Informational Purposes Only; Subject to Change
Submit Questions
15For Informational Purposes Only; Subject to Change
EMAIL: Ileana Ledet - [email protected]
Payroll Protection Program
• I’m already getting an Economic Injury Disaster Loan from the SBA - am I eligible for this loan also? Yes, you can refinance an EIDL with a PPP.
• What type of documentation will I need to submit to have my loan forgiveness?Lenders will want to see documentation that employees were paid in the 8 weeks following loan origination.
Frequently Asked Questions
16For Informational Purposes Only; Subject to Change
Payroll Protection Program
• If my loan is not forgiven, when do I need to start paying off my loan? Payments must start between 6 months – 1 year after loan origination.
• Is there a deadline to apply for this loan?Legislation suggests September 30, but that is subject to change.
Frequently Asked Questions
17For Informational Purposes Only; Subject to Change
Payroll Protection Program
• Am I eligible if I started my business in 2020?Yes. Payroll costs considered will be those incurred this year.
• What types of employees can I include in my loan calculation – only full-time, or part-time also? How about 1099 employees?You include all employees – FT and PT; include both W2 and 1099 workers
Frequently Asked Questions
18For Informational Purposes Only; Subject to Change
Payroll Protection Program
• How do the affiliation rules work in calculating number of employees?Affiliation rules are waived for businesses operating as a franchise with a NAICS 72 code (Hospitality). Under discussion for others.
• How does a sole proprietor calculate payroll if I’m the only employee?You would use your own income or net earnings.
Frequently Asked Questions
19For Informational Purposes Only; Subject to Change
Further Questions?
15For Informational Purposes Only; Subject to Change
EMAIL: Ileana Ledet - [email protected]
Thank You!
Additional Resources at gnoinc.org/coronavirus
