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SBA PAYMENT PROTECTION PROGRAM

Bourns Employees Federal Credit Union

PAYCHECK PROTECTION PROGRAM (PPP)

This loan is currently being offered to members of Bourns EFCU and  its affiliated SEGs. For an application, please email us, befcu@bourns.com

If you would like to get more information on becoming a SEG, please email us, befcu@bourns.com. Benefits of being a SEG click here for brochure. 


Payment Protection Program (PPP or P-3)

If you are a small business in Riverside County or San Bernardino County and your business needs some help through the Covid-19 crisis, you may want to look at the SBA’s P-3 loan.

It is a low rate, no fee loan—and, it may be eligible for full forgiveness.

Call BEFCU at to see if you qualify and how to apply! Ask for Christina G at 1-877-426-8767 x 2, she will be able to help you. If you are in the Victorville-Victor Valley area, call Mary K at 760-245-7170.

Please note the following:

  • The funds for this program are from the SBA and they are limited! There is no guarantee they will be available when you apply or when the SBA receives you loan request.

  • BEFCU is a conduit for these loans; it receives your loan application and sends it to the SBA; the SBA approves or turns down the loan. That decision is solely made by the SBA.

  • While the P-3 loan program may allow a larger loan, BEFCU’s maximum loan amount is $300,000. If you need a larger loan or qualify for a larger P-3 loan, you should pursue your request with another financial institution.


BORROWER INFORMATION

The Paycheck Protection Program (“PPP”) is a Small Business Administration (SBA) loan program that is intended to help small business keep workers employed during the Covid-19 pandemic. The Program runs through June 30, 2020 unless extended. All loan terms are the same for all borrowers.

WHAT IS THE PURPOSE OF THE LOAN?

The purpose of the loan is to allow those who qualify to maintain employee and compensation level for an 8-week period. The loan proceeds are used to allow those who qualify, to cover payroll costs, and most mortgage interest, rent, and utility costs over the 8-week period after the loan is funded.

WHO CAN APPLY?

  • Businesses: In operation on February 15, 2020 and with less than 500 employees (Small Business Concern as defined in section 3 of the Small Business Act and subject to SBA’s affiliation rules)

  • Tax Exempt Non-profits: In operation on February 15, 2020 and with less than 500 employees--if designated as a 501(c)(3) or 501(c)(19) veterans organization;

  • Tribal Business Concern as defined in section 31(b)(2)(C) of the small business act;

  • Sole proprietors, self-employed, and independent contractors in operation on February 15, 2020.

    WHAT IS NEEDED TO APPLY?

    Any missing documentation or unsigned forms could delay the application process.

  • Salary, wages, commissions, or cash tips or equivalent (e.g., employer records of past tips or, in the absence of records, employer can make a reasonable estimate of such tips)—compensation is capped at $100,000 on an annualized basis for each employee.

  • Employee benefits, including parental, family, medical, and sick leave; group health care benefits, including insurance premiums; retirement benefits; and vacation.

  • State and local taxes assessed on compensation.

  • Provide Form W-3 for 2019 and Quarterly 941s for 2019 (if applicable)

WHAT ARE THE LOAN TERMS AND CONDITIONS?

  • The interest rate is 100 basis points or one percent.

  • The Loan Term is 24 months (or 2 years) from date of funding.

  • Loan payments are deferred for the first 6 months; however, interest accrues over the period.

  • PPP provides that the lender is to rely on certifications of the borrower to determine the borrower’s eligibility and use of loan proceeds*.

  • No collateral or personal guarantee is required*.

  • Borrower pays no fees.

    * SBA: if proceeds are used for fraudulent purposes, the U.S. government will pursue criminal charges.

WHAT ARE BORROWER CERTIFICATIONS?

As part of the borrower’s application (form 2483), borrower certifies in good faith that:

  • Current economic uncertainty makes the loan necessary to support ongoing operations.

  • Funds will be used to retain staff, maintain payroll, and make mortgage, lease, and utility payments.

  • Borrower has not and will not receive another loan under this program.

  • Borrower will provide 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.

  • All information in the application and all supporting documents and forms is true and accurate.

  • Borrower acknowledges that the lender will calculate the eligible loan amount using documents submitted by the borrower. Borrower affirms that the tax documents are identical to those the borrower submitted to the IRS. Borrower understands, acknowledges, and agrees that lender can share tax information with SBA’s authorized representatives, including authorized representatives of the SBA Office of Inspector General, for purpose of compliance with SBA Loan Program Requirements and SBA reviews.

WHAT IS THE MAXIMUM PPP LOAN AMOUNT?

The maximum loan amount is equal to two months of the business’ average monthly payroll costs from last year (2019) or the 12-month period from March 2019 to March 2020 plus 25% of that amount. The amount computed cannot exceed $10 million. See Computing Your Loan Amount below.

NOTE 1: Payroll costs are capped at $100,000 annualized for each employee.

NOTE 2: If a business is seasonal or new, it can use a different applicable time period for the calculation.

WHAT QUALIFIES AS PAYROLL COSTS?

  • Salary, wages, commissions, or cash tips or the equivalent (based on employer records of past tips or, in the absence of such records, a reasonable, good-faith employer estimate of such 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; and payment of any retirement benefit.

  • State and local taxes assessed on compensation; and

    NOTE: 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 MANY LOANS CAN A BUSINESS TAKE OUT UNDER THE PROGRAM?

ONE loan.

WHAT CAN THE LOAN PROCEEDS BE USED FOR?

The loan proceeds can be used to for:

  • Payroll costs, including costs for parental, family, medical, and sick leave; payments for group health care benefits, including insurance premiums; payments for retirement benefits; and vacation.

  • Interest on mortgage obligations, 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.

    WHEN DO LOAN PAYMENTS BEGIN?

    Loan payments are deferred for 6 months; however, interest will accrue over the deferred period.

    WHAT IS LOAN FORGIVENESS AND HOW TO QUALIFY FOR IT?

    The PPP allows forgiveness of the loan amount plus any accrued interest, provided the borrower keeps salary and employee count the same during the 8-week period following funding as it had in one of the two periods listed below (i.e., based on the latest information from the SBA and Treasury Department).

    A borrower will owe money for the loan if the loan proceeds are used for anything other than for payroll costs, mortgage interest or rent, and utilities over the 8 weeks following the funding of the loan.

    The amount of the loan forgiven will be reduced proportionally by any reduction in the number of employees retained during the 8-week period after funding of the loan compared to one of two prior pay period time periods listed (borrower selects the period to use).

    To determine which period to use, the borrower can use the following: if (X), which equals average number of employees in the 8-week period after receipt of loan, is greater than (Y), determined as either:

  • The average number of full-time employees employed by borrower in the period beginning on February 15, 2019 and ending on June 30, 2019

  • The average number of full-time employees employed by the borrower in the period beginning on January 1, 2020 and ending on February 29, 2020.

    NOTE 1: companies that grew quickly in the second half of 2019 may be able to reduce their head count by using their January 2020 employment without reducing forgiveness. Conversely, businesses that contracted over 2019 will not be adversely impacted by their pre-COVID reductions and can choose the more recent time period.

    NOTE 2: The amount forgiven will be reduced by the amount of any reduction in total salary or wages of any employee used to make forgiveness calculations during the covered period that is in excess of 25% of the total salary or wages of the employee during the most recent full quarter during which the employee was employed before the covered period.

  • Number of Staff: Loan forgiveness reduced if the business decreases full-time employee headcount.

    1. of Payroll: Loan forgiveness reduced if business decreases salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019.
  • Re-Hiring: Business has until June 30, 2020 to restore full-time employment and salary levels for any changes made between February 15, 2020 and April 26, 2020.

    At least 75% of the loan amount must be used for payroll costs; no more than 25% of the loan proceeds can be forgiven when used to pay for mortgage interest, rent, and utility costs.

    HOW DOES A BUSINESS OBTAIN LOAN FORGIVENESS?

    The borrower has to submit a request to BEFCU requesting loan forgiveness.

    The request should include documents that verify the number of full-time equivalent employees and payroll amounts paid during the 8-week period after funding of the loans, as well as the payments on eligible mortgage, lease, and utility obligations. Missing documents could delay the approval process.

    The borrower must certify that the documents are true and that the business used the forgiveness amount to keep employees and make eligible mortgage interest, rent, and utility payments.

    BEFCU will make a decision on the forgiveness within 60 days (i.e., requirements of PPP).

    DEFINITIONS

  • Employees: includes individuals employed on a full-time, part-time, or other basis

  • Owners:

  • For a sole proprietorship, the sole proprietor;

  • For a partnership, all general partners, and limited partners owning 20% or more of the firm;

  • For a corporation, all owners of 20% or more of the corporation;

  • For limited liability companies, all members owning 20% or more of the company; and

  • Any Trustor (if the applicant is owned by a trust).

  • “current economic uncertainty”: a “facts and circumstances” test, CONSIDERATION: have a board or senior management level discussion of actual need for the loan—if the company did not take the loan would it have salary cuts or furloughs or layoffs; consider what happens if it is later determined that there was no such need for the loan.

    COMPUTING YOUR LOAN AMOUNT

    The following may be useful in computing the loan amount for your loan request.

    Step 1: Aggregate payroll costs from last 12 months for employees (principal place of residence: US).

    Step 2: Subtract any compensation paid to an employee in excess of an annual salary of $100,000.

    Step 3: Calculate average monthly payroll costs (divide the amount by 12).

    Step 4: Multiply the average monthly payroll costs from Step 3 by 2.5.

    Step 5: Add the outstanding amount of an Economic Injury Disaster Loan (EIDL) made between January 31, 2020 and April 3, 2020, less the amount of any “advance” under an EIDL COVID-19 loan.

    The examples below illustrate how this works.

    Example 1 – Annual payroll: $120,000; no employees made more than $100,000

    Annual payroll: $120,000 Divide $120,000 by 12 Average monthly payroll: $10,000

    Multiply $10,000 by 2.5 = $25,000

    Max loan amount is $25,000

    Example 2 – Annual payroll: $1,500,000; three employees $200,000 each

    Subtract annual compensation in excess of $100,000

    Annual qualifying payroll: $1,200,000 Divide $1,200,000 by 12

    Average monthly qualifying payroll: $100,000 Multiply by 2.5 = $250,000

    Max loan amount is $250,000

    Example 3 – No employees make more than $100,000 Outstanding EIDL loan of $10,000

    Annual payroll: $120,000 Divide $120,000 by 12 Average monthly payroll: $10,000 Multiply$10,000 by 2.5 = $25,000 Add EIDL loan of $10,000 = $35,000 Maximum loan amount is $35,000

If you are an independent contractor or sole proprietor (self-employed):

Step 1: Aggregate payroll costs from the last 12 months (e.g., calendar year 2019 or March 2019 to March 2020).

Step 2: To the extent not included in Step 1, annualized compensation for each employee is capped at $100,000. Subtract amount of compensation in excess of $100,000, for each such employee.

Step 3: Divide by 12 to calculate the average monthly payroll costs.

Step 4: Multiply by 2.5.

Step 5: If you have any outstanding amount of an Economic Injury Disaster Loan (“EIDL”), which you received between January 31, 2020 and April 3, 2020, add the outstanding amount, less the amount of any “advance” under an EIDL COVID-19 loan.

The amount remaining is your loan amount.

If you are a new business not in operation from February 15, 2019 and ending on June 30, 2019:

Step 1: Aggregate payroll costs from the period beginning on January 1, 2020 and ending on February 29, 2020 for employees whose principal place of residence is the United States.

Step 2: To the extent not included in Step 1, annualized compensation for each employee is capped at $100,000. Subtract amount of compensation in excess of $100,000, for each such employee.

Step 3: Divide by 2 to calculate the average monthly “payroll costs.”

Step 4: Multiply by 2.5.

Step 5: If you have any outstanding amount of an Economic Injury Disaster Loan (“EIDL”), which you received between January 31, 2020 and April 3, 2020, add the outstanding amount, less the amount of any “advance” under an EIDL COVID-19 loan.

The amount remaining is your loan amount.

If you are a seasonal business (as determined by the SBA):

Step 1: Aggregate payroll costs from beginning on your choice of February 15, 2019 or March 1, 2019 and ending June 30, 0219 for employees whose principal place of residence is the United States.

Step 2: To the extent not included in Step 1, annualized compensation for each employee is capped at $100,000. Subtract amount of compensation in excess of $100,000, for each such employee.

Step 3: Divide by 2 to calculate the average monthly “payroll costs.”

Step 4: Multiply by 2.5.

Step 5: If you have any outstanding amount of an Economic Injury Disaster Loan (“EIDL”), which you received between January 31, 2020 and April 3, 2020, add the outstanding amount, less the amount of any “advance” under an EIDL COVID-19 loan

The amount remaining is your loan amount.

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