Read about our COVID-19 financial relief efforts, including the Paycheck Protection Program for businesses.
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SBA Paycheck Protection Program
Keeping you informed on the Paycheck Protection Program
We have been humbled to partner with nearly 101,000 businesses, totaling more than $7.3 billion with the potential to impact more than 910,000 workers across all 50 states and the District of Columbia who are feeling the effects of the economic impact of the COVID-19 pandemic. As of July 1, the SBA is no longer accepting new loan applications for the Paycheck Protection Program (PPP).
In the next phase of the program, we will partner with PPP loan holders as we guide you through the loan forgiveness process.
The SBA Paycheck Protection Program (PPP)
The PPP is a federal loan program that is part of the stimulus package known as the CARES ACT that helps small- and medium-sized businesses affected by the COVID-19 pandemic to assist with covering costs related to payroll and certain other expenses. SBA loans are to be used for payroll costs (excluding amounts above a prorated annual salary of $100,000 for employees who make more than that amount), mortgage/debt interest, rent and utilities and refinancing an SBA Economic Injury Disaster Loan (EIDL) made between January 31, 2020 - April 3, 2020.
The Paycheck Protection Program (PPP) Flexibility Act
For customers with an existing PPP loan, the Paycheck Protection Program Flexibility Act affords significant changes to the forgiveness rules, most importantly:
The legislation extends the repayment period for all loans not yet funded to five years. This gives potential borrowers more time to repay and a lower monthly payment.
The new rules extend the covered period from the current eight weeks to 24 weeks. The covered period is the time in which businesses may incur or pay expenses to be considered for forgiveness, beginning on the date of loan origination.
Under the new rules, 60 percent of the forgiveness amount must be for eligible payroll costs, including cash compensation, employer contributions to health plans and retirement and owner compensation. The effect of this change is that a greater amount of non-payroll costs, such as utilities, rent and mortgage interest, will be eligible for forgiveness.
The legislation delayed when borrowers must make repayments on their loans. Loan deferrals are extended to the point U.S. Bank receives the SBA’s decision on a borrower’s application for loan forgiveness, which could be as long as 150 days under the current guidelines. Businesses that do not submit an application for loan forgiveness within 10 months of the last day of the covered period must begin making payments at that time.
Under the new rules, businesses have until December 31, 2020 to restore full-time equivalent (FTE) employee levels to pre-COVID-19 levels to qualify for full forgiveness. Businesses that are not able to rehire the same or similarly qualified employees, with good faith documentation, may not face reductions in their forgiveness amount.
Businesses that were unable to return to pre-COVID-19 levels of activity due to compliance with certain COVID-19 related orders will also not be subject to reductions in their forgiveness amount, as long as they can provide good faith documentation.
Recipients of PPP loans may defer payment of federal payroll taxes.
Loan forgiveness
Based on direction that has been provided relating to the CARES Act, your loan may be eligible for forgiveness. You, the borrower, may not be responsible for repayment of the loan if you use all the funds for forgivable expenses. Lenders will follow SBA guidance to determine the amount that is forgivable and will require an application with supporting documentation.
For additional answers to questions you may have about loan forgiveness, visit our PPP customer assistance page.
Your loan funds can be used for:
- Payroll, including benefits, to retain employees.
- Mortgage interest payments for mortgages incurred prior to February 15, 2020.
- Rent payments on leases dated before February 15, 2020.
- Utility payments under service agreements dated before February 15, 2020.
In addition to using your loan funds on eligible expenses, follow the guidance below to maximize your potential loan forgiveness:
- Expenses must be incurred during the 24-week period that begins on the date when you received your loan funds. For purposes of payroll expenses only, borrowers with biweekly (or more frequent) payroll schedules may elect to start the 24-week period on the first day of the pay period following loan disbursement.
- At least 60 percent of the PPP loan proceeds should be spent on payroll expenses and no more than 40 percent of the loan forgiveness amount can be attributable to non-payroll expenses (e.g., mortgage interest, rent or utility payments).
- Retain existing full-time equivalent (FTE) employee levels and maintain at least 75 percent of existing employee compensation levels (refer to the instructions in the PPP Schedule A worksheet for additional information).
On June 5, the President signed the Paycheck Protection Program Flexibility Act into law, which made significant changes to the PPP. Additionally, on June 17, the SBA released an updated Form 3508 and a new Form 3508EZ. We are in the process of making necessary updates to our forgiveness application process as a result of these changes. We will not be accepting digital applications for loan forgiveness until we have made the necessary changes, even for customers that have completed their eight-week covered period. We will communicate expected timing as soon as we are able.
Additional resources and education
Who can I contact for assistance?
For assistance, visit our PPP application assistance page for answers to the more frequently asked questions and further contact information. If you work directly with a U.S. Bank Business Banker, you may contact them for additional guidance.
How can I learn more about this program?
For additional information, please visit:
Subject to credit approval and program guidelines. SBA loans are subject to SBA eligibility guidelines. Certain restrictions apply to refinancing options and are subject to program terms. Refinances of existing SBA loans are excluded.
Financing maximums and terms are determined by borrower qualifications and use of funds. U.S. Bank and its representatives do not provide tax advice. Consult an advisor regarding a particular financial situation. Credit products are offered by U.S. Bank National Association.
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