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

We are providing this information to all the customers and communities of TrailWest Bank. If you have any questions, please contact your preferred branch.

The Paycheck Protection Program (PPP) was announced as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The PPP is a federal program that will allocate up to $349 billion to help small businesses keep workers employed. The loans may be forgiven if borrowers keep all employees on payroll and maintain compensation levels for eight weeks after the loan is made and the loan funds are used for specific qualified expenses, including payroll, rent, mortgage interest, or utilities.

Details of the program are still being developed, but we want to help our customers and communities be prepared by providing the following information.

Important Program Dates and Details Documents you will need to submit:

Businesses and sole proprietorship’s can apply for the Paycheck Protection Program beginning on April 3, 2020.

Independent contractors and self-employed individuals can apply for the Paycheck Protection Program beginning on April 10, 2020.

The program will be available through June 30, 2020, however the total funding amount is capped, so borrowers are encouraged to apply as quickly as possible.

Frequently Asked Questions:

We will continue to update this section as more information becomes available.

Q: Who can apply?

A: You can apply if you are:

  • A business with fewer than 500 employees (this threshold includes all employees: full-time, part-time, and any other status)
  • A business that otherwise meets the SBA’s size standard
  • A 501(c)(3) with fewer than 500 employees
  • An individual who operates as a sole proprietor
  • An individual who operates as an independent contractor
  • An individual who is self-employed who regularly carries on any trade or business
  • A Tribal business concern that meets the SBA size standard
  • A 501(c) (19) Veterans Organization that meets the SBA size standard

Special rules for additional eligibility:

  • If you are in the accommodation and food services sector (NAICS 72), the 500-employee rule is applied on a per physical location basis

Q: How can I use the PPP loan?

A: The proceeds of the PPP loan can be used to pay for:

  • Payroll costs, including benefits
  • Interest on mortgage obligations, for mortgages in place before February 15, 2020
  • Rent, for lease agreements in place before February 15, 2020
  • Utilities, for which service began before February 15, 2020

Q: What counts as a payroll cost?

A: For Employers:

The sum of payments of any compensation (capped at $100,000 on an annualized basis for each employee) including:

  • salary, wage, commission, or similar compensation;
  • payment of cash tip or equivalent;
  • payment for vacation, parental, family, medical, or sick leave
  • allowance for dismissal or separation
  • payment required for the provisions of group health care benefits, including insurance premiums
  • payment of any retirement benefit
  • payment of state or local tax assessed on the compensation of the employee

For Sole Proprietors, Independent Contractors, and Self-Employed:

The sum of payments of any compensation to or income that is a wage, commission, income, net earnings from self-employment, or similar compensation and that is in an amount that is not more than $100,000 in one year, as pro-rated for the covered period.

Q: What does not count as a payroll cost?

A: You should exclude these items from your payroll cost calculation:

  • Compensation of an individual employee in excess of an annual salary of $100,000, as prorated for the period February 15, to June 30, 2020
  • Payroll taxes, railroad retirement taxes, and income taxes
  • Any compensation of an employee whose principal place of residence is outside of the United States
  • Qualified sick leave wages for which a credit is allowed under section 7001 of the Families First Coronavirus Response Act (Public Law 116–5 127); or qualified family leave wages for which a credit is allowed under section 7003 of the Families First Coronavirus Response Act

Q: How much can I borrow?

A: Loans can be up to 2.5 x the borrower’s average monthly payroll costs, not to exceed $10 million. Seasonal and new businesses should use the applicable time periods for your calculation.

Your payroll costs are EQUAL to the SUM of your included payroll costs MINUS the SUM of your excluded payroll costs.

Q: Do I need to repay this loan? Or will it be forgiven?

A: Borrowers are eligible to have their loans forgiven. However, you will owe money when your loan is due if you use the loan amount for anything other than payroll costs, mortgage interest, rent, and utilities payments over the 8 weeks after getting the loan.

You will also owe money if you do not maintain your staff and payroll at the level of when the loan was approved:

  • Loan forgiveness will be reduced if you decrease your full-time employee headcount.
  • Loan forgiveness will be reduced if you decrease salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019.
  • You have until June 30, 2020 to restore your full-time employment and salary levels for any changes made between February 15, 2020 and April 26, 2020.

Q: How can I request loan forgiveness?

A: You can submit a request to the lender that is servicing the loan with relevant documentation of the number of full-time equivalent employees and pay rates, as well as the payments on eligible mortgage, lease, and utility obligations. You must certify that the documents are true and that you used the forgiveness amount to keep employees and make eligible mortgage interest, rent, and utility payments. The lender must make a decision on the forgiveness within 60 days.

Q: If I do not qualify for loan forgiveness, what will I need to pay and when is the loan due?

A: The loan has a fixed interest rate of 1.00%.

All payments are deferred for 6 months; however, interest will continue to accrue over this period. The loan is due in 2 years, and there are no prepayment penalties or fees.

The US Chamber of Commerce has provided a helpful guide for calculating loan forgiveness reduction. If you are interested in estimating a potential reduction, view page 4 of this PDF:

https://www.uschamber.com/sites/default/files/023595_comm_corona_virus_smallbiz_loan_final.pdf