Coronavirus Aid, Relief, and Economic Security Act (CARES Act) Paycheck Protection Program (PPP)

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The CARES Act was signed into law on 3/27/2020. The Act includes the Paycheck Protection Program (PPP) which was put in place to keep people employed and aid Small Businesses. The loans are not yet available to businesses until SBA interprets the regulations and issues its rules and guidance. Below is a brief summary of sections of the Act. Refer to the Act for full requirements while we await SBA guidelines and their interpretations of the requirements.


PPP Highlights

  • 100% guaranteed SBA 7a loans
  • Delivered by SBA 7a preferred lenders such as Choice Bank
  • 4% APR* maximum interest rate
  • Payments will be deferred for 6 – 12 months
  • Loans may be made until June 30, 2020
  • A portion of the loan may be forgiven by SBA if used for eligible expenses
  • The forgiven portion will be paid to the lender to reduce the loan
  • The remaining loan amount after loan forgiveness will be repaid by the business over 10 years

Who May Apply? 

  • Any business with 500 or fewer employees or those that meet SBA’s current size standards
  • Self-employed Individuals
  • Some non-profits 501(c)(3) and 501(c)(19) veteran organizations and tribal business with 500 or fewer employees
  • Applicants in NAICS code 72 (Accommodation and Food Service) may apply if they have 500 or fewer employees per physical location
  • Franchises that are assigned a franchise identifier code by SBA. More info here.
  • A borrower may have both an EIDL loan and a PPP loan if each was used for different purposes
  • See side by side comparison on our website to help determine which program(s) are right for you

Loan Amount and Uses

  • Up to $10 million to a borrower and affiliates
  • Maximum loan size to a borrower is 2.5 times the average monthly payroll
  • Loans to cover eligible payroll costs, interest on mortgage payments, rent obligations, and utilities
  • Economic Injury Disaster Loan (EIDL) may be rolled into the PPP loan

Eligibility and Terms

  • The borrower must have been in business on 2/15/2020
  • The borrower must certify:
    • The loan is needed to support ongoing operations
    • Funds will be used to retain workers, pay payroll expenses and pay overhead expenses
    • They have not applied for or received an SBA 7a loan for similar purposes or duplicate amounts
    • Any other certifications that may be required by SBA
  • Forgiveness:
    • Loans may be forgiven based on the borrower continuing to employ employees
    • Forgiven amount will be reduced for laid-off employees and/or reduced compensation
    • Forgiveness reduction can be avoided if borrower rehires employees or increases salary by June 30, 2020
    • Borrowers will apply for debt forgiveness after an 8-week period following loan note date
    • Will be required to turn in payroll reports and receipts to show funds were used for eligible purposes
    • Other documentation may be required by SBA
    • Funds not forgiven will be repaid over a 10-year term
  • Eligible Expenses: Overhead expenses and payroll expenses for employees making < $100,000 during the 8-week period after note date
  • We are awaiting other eligibility requirements from SBA

Collateral and Personal Guaranty Requirements

  • No Collateral
  • No Personal Guarantees

What is the process and when will I get funds?

  • SBA will provide Banks guidance on the application requirements in 1-2 weeks
  • Bank/borrower will be in control of when funds are delivered based on how quickly they can provide the required information
  • Choice Bank has the capacity to turn loans quickly

How to Apply

  • We are still awaiting more information from SBA. Choice Bank’s SBA Team will share updates via our website here. Stay tuned for additional details on how to sign-up for notifications.


CARES Program Benefits for Existing SBA Loans

  • In addition to the PPP, the CARES program authorized the SBA to make six months of payments on existing SBA loans
  • For borrowers that have already been granted a deferment on an existing SBA loan, the six months of payment will begin after the deferment period
  • New SBA loans made in the next 6 months will also have six months of payments deferred by SBA
  • We do not have information yet as to how the payments will be administered
  • Payments will not be made by SBA on PPP loans which will have a 6 or 12 month deferment period


Emergency Grant

  • Additionally, from January 31 to December 31, 2020: qualifying entities may request that the SBA provide an emergency grant (capped at $10,000.00) either from funds already received or an advance on their EIDL application
  • An applicant shall not be required to repay any amounts of any such advance or grant, even if the applicant is subsequently denied on a pending EIDL loan
  • Apply HERE

APR = Annual Percentage Yield


Please feel free to reach out to our team of SBA experts directly
Phone: (763) 398-3333
Mon – Fri, 8:00AM – 5:00PM CST