Paycheck Protection Program: Frequently Asked Questions

FREQUENTLY ASKED QUESTIONS (FAQ)

U.S. Small Business Administration (SBA) Small Business Relief Options approved through the Coronavirus Aid, Relief, & Economic Security (CARES) Act


What are the various relief options available through the CARES Act?

The Paycheck Protection Program (PPP) is a program designed to help small businesses, independent contractors, and nonprofits keep workers on the payroll by providing forgivable loans of up to lesser of $10 million or 2.5 times the organization's monthly payroll.

The Economic Injury Disaster Loans (EIDL) program has two loan options: (1) a forgivable emergency advance of up to $10,000 to small businesses, independent contractors, and nonprofits experiencing temporary difficulties due to COVID-19; or (2) a low-interest loan of up to $2 million to small businesses, independent contractors, and nonprofits experiencing temporary difficulties due to COVID-19.


What types of organizations are eligible for this loan?

Any small business with fewer than 500 employees (including full and part time employees); private non-profit organizations under section 501(c)(3); 501(c)19 veterans organizations; Tribal business concern (sec. 31(b)(2)(C) of the Small Business Act); any business with a NAICS Code that begins with 72 that has more than 1 physical location and employs less than 500 individuals per location that are affected by COVID-19; and sole proprietors, independent contractors, and self-employed persons. Small businesses ineligible to apply for the program include organizations with more than 500 employees and governmental entities.


Are there organizations that are ineligible for this loan?

Any business with more than 500 employees (and that doesn't meet the exception for businesses with a NAICS Code beginning with 72) and any government-owned entity.


How does the loan work?

An organization can apply for a loan of up to the lessor of $10 million or the organization's monthly payroll times 2.5. The loan is 100% forgivable if the funds are used for payroll costs including salary, wages, commissions, and tips (capped at $100,000/year for each employee) and time-off, health care, and retirement benefits; and interest on mortgage, rent, and utilities with at least 75% of the loan proceeds used on payroll. If the loan is used for other purposes than those listed above, the loan must be paid back. If that is the case, payments must begin after 6 months with the total amount of the loan, plus 1% interest, due within 2 years.


What are the eligibility requirements to apply for the above programs?

Any small business with fewer than 500 employees (including sole proprietorships, independent contractors, and self-employed persons), private non-profit organizations or 501(c)19 veterans organizations that are affected by COVID-19 can apply to the programs.


What if my business has more than 500 employees? Am I eligible for any other programs?

The federal government has made available loan programs for mid-size businesses.

Main Street Lending Program: Mid-size businesses and non-profits (organizations with between 500 and 10,000 employees) can take advantage of four-year loans that won't require principal or interest payments for one year. The loan requires a business to have a 90 percent employee retention rate with full compensation and benefits through September 30; a prohibition on outsourcing or offshoring jobs for 2 years after the loan has been repaid; maintain existing collective bargaining agreements for 2 years after the loan is repaid; and remain neutral on any union organizing.

Aid to Larger Businesses: Large U.S. businesses with significant operations and a majority of their employees in the U.S. will be eligible for capital including loans through the Federal Reserve. This program will go beyond businesses to include states and municipalities. Requirements of the loan are similar to the Main Street Lending Program (above) in that a business must retain 90 percent of its workforce until September 30.


How does the loan work?

The loan is 100% forgivable if the funds are used for payroll costs, interest on mortgage, rent, and utilities with at least 75% of the loan proceeds used on payroll. If the loan is used for other purposes than those listed above, the loan must be paid back. If that is the case, payments must begin after 6 months with the total amount of the loan, plus 1% interest, due within 2 years.


How much money can I apply for?

Your organization can apply for funding up to the lessor of $10 million or your monthly payroll times 2.5.


What can I use the money for?

As mentioned above, the money can be used for any business purposes, but in order for the loan to be forgivable, the money must be used for payroll costs, interest on mortgage, rent, and utilities with 75% of the money used on payroll costs.


How do I apply?

Your organization can apply through any existing 7(a) lending program or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating in the program.


What information do I need for the application?

Your organization may need the following documentation:

  1. 2019 payroll: total payroll for full year 2019, by employee, as reported to the IRS
  2. 2019 Independent contractor costs - listing of 1099s - MISC for 2019 independent contractors, by person, as reported to the IRS
  3. Payroll report as of February 15, 2020 or closest date after that date, by employee


How long are the loans available?

Lenders began processing the loans for small businesses on April 3, 2020. For independent contractors or self-employed persons, lenders could begin processing those loans on April 10, 2020. The program will be available until June 30, 2020, or until funds run out. The loans are approved on a first-come, first-served basis.


What if my organization applied after the funds were exhausted? Do I need to reapply?

If your organization submitted an application after the initial $349 billion in PPP funds were exhausted, you need to ensure your bank/lender will submit your application as soon as the program is reopened (Monday, April 27, 2020, at 10:30 a.m. EDT, 9:30 a.m. CDT).


Is the SBA accepting applications currently?

No, the SBA's application portal is currently closed. As mentioned above, the program will reopen Monday, April 27, 2020, at 9:30 a.m. CDT.


Does IDHS want eligible providers to apply for the PPP?

Yes, the IDHS does want eligible providers, whose service delivery has been stopped or limited, to apply for the PPP to maximize the federal dollars available. Every successful application increases state funding to continue to support our social service delivery system.


Can a provider use the PPP funds for the same expenses funded by IDHS state grant payments?

No, IDHS cannot reimburse providers for expenses funded by the PPP.

  • For expense-based grantees, whose service delivery has been stopped or limited, approved for PPP, IDHS will fund any eligible grant expenditures not funded by the PPP.
  • For fee-for-service and fixed rate grantees approved for PPP, IDHS will reimburse for services provided during the month, but no additional State funds will be used for retention payments met by the PPP.


If a provider applies and is approved for a PPP loan, should we use PPP funds instead of State funds?

Yes, IDHS encourages the use of the PPP loans for eligible expenditures for providers whose service delivery has been stopped or limited. IDHS cannot reimburse for expenditures funded by PPP loans (i.e. IDHS and the federal government cannot pay twice for the same expenditures).


Will IDHS take into consideration that not all costs are covered by PPP?

Yes, IDHS will reimburse for eligible grant expenditures not covered by the PPP within the providers' existing grant agreement. For fee-for-service and fixed rate grantees, if PPP does not cover the gap between actual billings for services provided and average monthly billings prior to the pandemic, IDHS will make retention payments for the amount not covered by PPP for FY20.


How will IDHS handle retention payments if a provider is using the PPP loan for other expenditures not covered by IDHS grant funds?

IDHS will reimburse for eligible expenditures not covered by the PPP within the providers' existing grant agreement.


Can providers use PPP loans to address cash flow issues due to delays in payments as shared by the Office of the Comptroller?

IDHS can only reimburse for eligible expenditures not covered by the PPP within the provider's existing grant agreement. Provider should follow guidelines outlined by the Small Business Administration regarding appropriate uses of the PPP loans. Regardless of the circumstances, the provider cannot use two sets of funds (the State and a PPP loan) to get paid twice for the same expenditure.


Specific to DD, can a Community Day Services provider currently operating residential programs use both State funded fee-for-service payments and a PPP loan?

IDHS will continue to make payments for services provided at the established rates. For providers stopped or limited in service delivery, like Community Day Service providers, IDHS will make retention payments if a PPP loan is not approved. No additional State funds will be used for retention payments met by the PPP.


Specific to DD providers, are you recommending for CILA 60D providers to apply for this PPP loan?

No, IDHS is not recommending or requiring CILA providers, or any other provider whose service delivery has not been stopped or limited, to apply for a PPP loan because IDHS is continuing to reimburse for services provided at established rates. IDHS is only requiring eligible IDHS-funded providers, whose service delivery has been stopped or limited, to apply for PPP loans to maximize federal funds to reduce reliance on State resources for retention payments.

If my organization's PPP loan starts mid-month, will IDHS pay the other part of the month in full?

Yes, IDHS will make retention payments for the portion of the month not covered by the PPP loan. IDHS program staff will be contacting the providers approved for PPP to obtain the loan coverage dates before April retention payments are made.


If my organization's PPP loan doesn't cover the full cost of my CDS operations, will the state cover those costs?

If the PPP amount does not cover the average monthly billings, as calculated by the Division of Developmental Disabilities, IDHS will make a retention payment up to the average monthly billing amount not covered by PPP. IDHS will provide a form for completion to ensure there is no duplication of funds. That form will be provided in the coming weeks.


For expense-based grant programs still providing services, would an organization bill IDHS for their regular expenses?

Yes, for state grant programs continuing to provide services, the eligible grant expenditures will be reimbursed by IDHS funds. If state grant program is stopped or limited, PPP funds should be used to cover eligible costs.


The State has said they want to protect providers from double-dipping. Has the federal government published any guidance on double-dipping?

As communicated previously, IDHS cannot make duplicate retention payments for expenses an organization is funding with the PPP funds. As for the PPP fund regulations, please follow guidance provided by the Small Business Administration.