Small Business Loans

The Coronavirus Economic Recovery Package provides $350 billion to the creation of a new loan program, the Paycheck Protection Program (PPP), which will provide 100% federally guaranteed and forgivable loans (grants) to small businesses who retain their employees or restore employees who were fired after February 15. 

To apply for the Paycheck Protection Program (PPP) follow the links below: 

  • High-Level Summary of the Paycheck Protection Program: HERE  
  • *New as of 04/23* Information on Loan details and Forgiveness: HERE
  • General Information Page: HERE 
  • Information for Lenders: HERE
  • Application for Lenders: HERE 
  • Information for Borrowers: HERE 
  • Application for Borrowers: HERE  
    • Fill out the form linked and contact your existing bank, credit union or local SBA office.
    • To find the nearest lender to you, click HERE

Additional links related to the PPP:  

***Scammers are using the Small Business Administration (SBA) and Internal Revenue Service (IRS) names to con small businesses and individuals during the COVID-19 crisis. Montanans should be on the lookout for a surge of calls and email phishing attempts about the Coronavirus.

Things to note when looking for fraud:  

  • Emails from government agencies will always end in .gov.
  • Do not release any private information (social security number, date of birth, etc.) or banking information in response to an unsolicited caller, letter, email, or text.
  • There is no cost to apply for a COVID-19 Economic Injury Disaster Loan and the SBA/IRS will never ask you to provide a credit card or private information

Frequently Asked Questions   

*New as of 4/29* How do I calculate the pay period for employees who are seasonal for the PPP loan?

  • Daines helped secured a new guideline under the PPP to allow seasonal employers to incorporate their peak months when calculating their maximum allowable loan size.
  • Previously, seasonal employers calculated their loan size by using their average monthly payroll from 3/1/2019 - 6/30/2019. Now, they can use any consecutive 12 week period from 5/1/19 - 9/15/2019.

*New as of 4/24* Does the cost of a housing stipend or allowance provided to an employee as part of compensation count toward payroll costs?  

  • Yes. Payroll costs includes all cash compensation paid to employees, subject to the $100,000 annual compensation per employee limitation.  

*New as of 4/24* Does the cost of a housing stipend or allowance provided to an employee as part of compensation count toward payroll costs?  

  • PPP applicants and lenders may consider IRS regulations (26 CFR § 1.121- 1(b)(2)) when determining whether an individual employee’s principal place of residence is in the United States.  

*New as of 4/24*Are agricultural producers, farmers, and ranchers eligible for the Small Business Administration’s Paycheck Protection Program (PPP)?

  • Agricultural producers, farmers, and ranchers with 500 or fewer employees whose principal place of residence is in the United States are eligible.
  • Farms are eligible if: (i) the farm has 500 or less employees, OR (ii) it fits within the revenue-based sized standard, which is on average annual receipts of $1M.
  • Additionally, farms can qualify for PPP if it meets SBA’s “alternative size standard.” The “alternative size standard” is currently: (1) a maximum net worth of the business not more than $15 million, AND (2) the average net income Federal income taxes of the business for the two full fiscal years before the date of the application be not more than $5 million.

*New as of 4/24*Are agricultural and other forms of cooperatives eligible for PPP?

  • As long as other eligibility requirements are met, small agricultural cooperatives may receive PPP loans. Other forms of cooperatives may be eligible provided they comply with all other Loan Program Requirements (as defined in 13 CFR 120.10).

*New as of 05/07* When will PPP and Economic Injury Disaster Loans (EIDL) begin accepting applications again? 

  • The SBA will begin accepting new EIDL applications on a limited basis only, in order to provide unprecedented relief to U.S. agricultural businesses. For agricultural businesses that submitted an EIDL loan application through the streamlined application portal prior to the legislative change, SBA will move forward and process these applications without the need for re-applying. All other EIDL loan applications that were submitted before the portal stopped accepting new applications on April 15 will be processed on a first-in, first-out basis.

What types of businesses and entities are eligible for a Paycheck Protection Program loan?

  • Businesses and entities must have been in operation on February 15, 2020.
  • Small businesses and (501(c)(3) and 501(c)(19) non-profits with fewer than 500 employees (includes full-time, part-time, or any other status), or fewer than 500 employees per physical location for franchisees, hospitality, and restaurant businesses, or the applicable size standard in number of employees for the North American Industry Classification System (NAICS) industry as provided by SBA, if higher.
  • Sole proprietorships, independent contractors, gig workers, and self-employed individuals are all eligible.

Where should I go to get a PPP loan?

  • You can apply with any lending institution that is a current 7(a) lender. You should start by contacting the local financial institution you already use to see if they are participating. The Department of Treasury over the next few weeks will approve additional bank and non-bank lenders to participate in the program.  
  • To find the nearest lender to you, click HERE.

What is the maximum amount I can borrow?

  • Any small business is eligible to borrow 250 percent of their average monthly payroll expenses, up to a total of $10 million. This amount is intended to cover 8 weeks of payroll expenses and any additional amounts for making payments towards debt obligations. This 8-week period may be applied to any time frame between February 15, 2020 and June 30, 2020. Seasonal business expenses will be measured using a 12-week period beginning February 15, 2019, or using the period from March 1, 2019 – June 30, 2019, whichever the seasonal employer chooses.

How can I use the money such that the loan will be forgiven?

  • The amount of principal that may be forgiven is equal to the sum of expenses for payroll, and existing interest payments on mortgages, rent payments, leases, and utility service agreements. Payroll costs include employee salaries (up to an annual rate of pay of $100,000), hourly wages and cash tips, paid sick or medical leave, and group health insurance premiums.
  • If you would like to use the Paycheck Protection Program for other business-related expenses, like inventory, you can, but that portion of the loan will not be forgiven.

What if I already fired my employees?

  • Reductions in employment or wages that occur during the period beginning on February 15, 2020 and ending April 26, 2020 (30 days after date of enactment) shall not reduce the amount of loan forgiveness if by June 30, 2020, the borrower eliminates the reduction in employees or reduction in wages.

When is the loan forgiven?

  • The loan is forgiven at the end of the 8-week period after you take out the loan. Borrowers will work with lenders to verify covered expenses and the proper amount of forgiveness.

What costs are eligible for payroll?

  • Compensation (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 employees.  

I’m an employer taking advantage of the 2020 Social Security payroll tax deferral under the CARES Act, but also applied for a PPP Loan. Can I do both?  

  • Yes. According to the IRS, a business that started deferring 2020 payroll tax prior to receiving a PPP loan can continue to do so until the date on which the lender makes a decision on loan forgiveness.
  • Once an employer receives a decision from their lender that the PPP loan is forgiven, the business can no longer defer payroll taxes, and must begin paying on schedule.
  • However, the payroll taxes deferred from March 27 until the date on which the PPP loan is forgiven can be paid at the end of 2021 and 2022 (50% by the end of each year). 

Comparison of EIDL and PPP Loans

Loan Terms

Economic Injury Disaster Loan (EIDL)

Paycheck Protection Program (PPP)

Speed

Applications are currently open

Applications are currently open

Process

Apply through SBA website (www.SBA.gov).

Find an eligible lender

Amount

Up to $2 million.

  • Initial loan payments are capped at $15,000

Emergency grant of up to $10,000 available '

  • $1,000 per employee up to $10,000

2.5x average monthly payroll costs, capped at $10 million

Interest Rate

3.75% (for profit)

2.75% (non-profit)

1% (if not forgiven)

Collateral

No collateral for loans less than $25,000

No collateral required

Guaranty

Not required for loan less than $200,000

No guaranty required

Repayment

Amortized principle and interest over up to 30 years

First payment deferred for 6 months

For amounts not forgiven, two years

Affiliate Rules

A business, cooperative, ESOP or tribal concern with fewer than 500 employees; a sole proprietorship or independent contractor; any business that qualifies based on NAICS code

Modified for hospitality and restaurant businesses to allow measurement per location; otherwise, any small business that qualified based on NAICS code

    How do EIDL and PPP work together?

    • An applicant cannot “double-dip” and receive duplicate funds for the same losses.
    • EIDL loan proceeds may be refinanced into a PPP loan.
    • EIDL applications are open and currently available. 

    Small business may still recieve financial relief through the SBA's traditional loan programs. 

    • Small businesses can access SBA’s 7(a) loan program, which provides loans of up to $5 million to cover eligible expenses.
    • SBA’s express loan program offers qualified loans up to $350,000.
    • Through the SBA’s Community Advantage loan pilot program, mission-based lenders can assist small businesses in underserved markets with loans of up to $250,000.
    • The SBA provides export loans to help small businesses achieve sales and respond to challenges such as the coronavirus that impact trade.

      Small Business Tax Incentives:

      • Employer Payroll Tax Delay*
        • Employers can defer the 6.2 percent payroll tax due for rest of year until end of 2021, 2022.
        • Congress thinks the net cost of this provision is about $12.3 billion, although estimates of the amount of extra cash this would provide businesses are much larger (depending on unemployment, about $732 billion over the next two years).
      • Employee Retention Payroll Tax Credit*
        • Certain employers may receive a payroll tax credit of as much as $5,000 per employee for wages (and health benefits) paid after March 12, 2020, and before January 1, 2021.
        • If the credit amount exceeds the employer’s liability, the excess shall be refundable. It is estimated that the credit will provide an aggregate benefit of about $54.6 billion.
      • Technical Correction to Fix ‘Retail Glitch’
        • Businesses can fully deduct the cost of certain property improvements back to 2018.


      *Note: the payroll tax delay and employee retention payroll tax credit are not available to employers receiving assistance through the Paycheck Protection Program.