PRESTAMOS COVID PAYCHECK PROTECTION PROGRAM (PPP) FOR CORONAVIRUS RELIEF

The Paycheck Protection Program Loan is an 8-24 week forgivable loan program designed to help small businesses and self-employed individuals maintain payroll and self-employment income. You are required to apply for forgiveness; it is not automatic.

If your loan was funded directly through Prestamos CDFI, you will apply through your Sparks portal. If you applied for your PPP through BlueAcorn, you will apply for forgiveness through the BlueAcorn portal once it opens in late July (anticipated).

Prestamos will be offering webinars throughout the process and will keep our community aware of rule changes as they are updated by the Small Business Administration. You can register for an upcoming PPP Forgiveness Webinar here: http://prestamoscdfi.org/events/

Self-Employed Individuals (Sch C/1065 Partnerships) are eligible to use up to $20,833 in “Owner Compensation Replacement” across all their businesses in total. Forgiveness is based on the length of the covered period:

• Borrowers that elect to use an eight-week covered period, the amount of loan forgiveness requested for owner-employees and self-employed individuals’ payroll compensation is capped at eight weeks’ worth (8/52) of 2019 or 2020 compensation (i.e., approximately 15.38 percent of 2019 or 2020 compensation) or $15,385 per individual, whichever is less, in total across all businesses.
• Borrowers that elect to use a ten-week covered period, the cap is ten weeks’ worth (10/52) of 2019 or 2020 compensation (approximately 19.23 percent) or $19,231 per individual, whichever is less, in total across all businesses.
• For a covered period longer than 2.5 months, the amount of loan forgiveness requested for owner-employees and self-employed individuals’ payroll compensation is capped at 2.5 months’ worth (2.5/12) of 2019 or 2020 compensation (up to $20,833) in total across all businesses.

Borrowers with W2 employees must use a minimum of 60% of their PPP funds for payroll expenses including:

• Gross Wages, salary, tips, time off, sick leave, bonuses, etc up to the equivalent of $100,000 per employee
• Company paid-for health and retirement benefits
• State unemployment taxes only (no federal unemployment)

While W2 Employers are eligible to use 100% of the funds for eligible payroll expenses, they are able to use up to 40% for other eligible expenses including:

1. covered mortgage obligations: payments of mortgage interest (not including any prepayment or payment of principal) on any business mortgage obligation on real or personal property incurred before February 15, 2020 (“business mortgage interest payments”);
2. Covered rent obligations: business rent or lease payments pursuant to lease agreements for real or personal property in force before February 15, 2020 (“business rent or lease payments”);
3. Covered utility payments: business payments for a service for the distribution of electricity, gas, water, telephone, transportation, or internet access for which service began before February 15, 2020 (“business utility payments”);
4. Covered operations expenditures: payments for any business software or cloud computing service that facilitates business operations, product or service delivery, the processing, payment, or tracking of payroll expenses, human resources, sales and billing functions, or accounting of tracking of supplies, inventory, records, and expenses;
5. Covered property damage costs: costs related to property damage and vandalism or looting due to public disturbances that occurred during 2020 that were not covered by insurance or other compensation;
6. Covered supplier costs: expenditures made to a supplier of goods for the supply of goods that are essential to the operations of the Borrower at the time at which the expenditure is made, and made pursuant to a contract, order, or purchase order in effect prior to the beginning of the Covered Period (for perishable goods, the contract, order, or purchase order may have been in effect before or at any time during the Covered Period); and
7. Covered worker protection expenditures: operating or capital expenditures that facilitate the adaptation of the business activities of an entity to comply with the requirements established or guidance issued by the Department of Health and Human Services, the Centers for Disease Control, or the Occupational Safety and Health Administration, or any equivalent requirements established or guidance issued by a State or local government, during the period starting March 1, 2020 and ending on the date on which the national emergency declared by the President with respect to the Coronavirus Disease 2019 (COVID-19) expires related to maintenance standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID-19, but does not include residential real property or intangible property.

Borrowers have ten (10) months after the end of their covered period (an 8-24 period of your choice) to complete and submit the application for forgiveness. Borrowers who have received a PPP loan directly through Prestamos (this does not apply to Blue Acorn clients) and that are now ready to apply for forgiveness should request an invitation to the Sparks forgiveness application by sending a written request to PPP@cplc.org

Once the forgiveness module has been activated, you will complete the entire application online through a series of questions and sections where you can upload documentation. If your PPP loan was $150,000 or less, providing documentation on use of funds is optional but documentation should be retained for six (6) years from the date of forgiveness determination as per the PPP guidelines.

All borrowers will select an 8-week to 24-week covered period that begins on the date funds were deposited into your bank account. Borrowers can submit forgiveness applications once they have used all of the funds as long as it has been a minimum of 8-weeks from the date of deposit. The online module will track your progress and automatically calculate what percentage of your PPP loan is forgivable based on the answers you provide during the process.

You are able to save your application and complete it at a later date if you do not have all of the documents available when you start the forgiveness process. When you complete your application, please make sure you hit “submit.” Once you officially submit your forgiveness application to Prestamos, we have 60-days to make a determination on your forgiveness and submit your application to The SBA for final approval. You can track each step of the process through the online portal in the forgiveness module on demand.