Cass Commercial Bank has prepared preliminary information on the Paycheck Protection Program (PPP) administered through the SBA 7(a) program. Things may change some as the program works itself out on website and lenders. Thanks to Cass for sharing this.

The following summation of the PPP created by the CARES Act does not include all provisions requirements and restrictions. Many provisions are subject to interpretation and may change as the Act is implemented by the Small Business Administration (SBA). Please do not rely on this summary alone. We encourage you to consult your accountant and legal advisors. Cass Commercial Bank is an Authorized SBA 7(a) lender and will expidite applications for PPP loans.

Covered Period is defined as February 15, 2020 to June 30, 2020

Qualified Borrowers

  • Small employers with 500 employees or fewer, as well as those that meet the current SBA size standards. Click here to go to to review SBA gross revenue limits and/or employee limits.
  • The CARES Act adds independent contractors, sole proprietorships, self-employed, nonprofits, veteran’s organizations and tribal businesses to the definition of small businesses which are also limited to no more than 500 employees and revenue limits for specific industries as defined by the SBA based on NAICS code.
  • Businesses with more than one physical location that employs no more the 500 employees per physical location in certain industries (NAICS codes beginning with 72) and below the gross revenue threshold.
  • Affiliation rules for businesses in the hospitality and restaurant industries, franchises (that are approved on the SBA’s Franchise Directory) are waived.
  • Must be in business at February 15, 2020 and had paid employees.
  • Must certify business has been impacted by Covid-19 and will use funds to retain workers and
    maintain payroll, rent, interest on mortgages and utility payments.
  • Has not also applied for Economic Injury Disaster Loan related to Covid-19 (or another SBA
    program related to Covid-19).

Loan Amount

  • Up to 2.5x the average monthly payroll (as defined below)
  • Capped at $10,000,000

Calculation of Average Monthly Payroll

The amount of average monthly employment costs for the 1-year period prior to the date of the loan application with certain inclusions and exclusions as follows:

  • Inclusions:
    • Salary & Wages
    • Commissions
    • Tips
    • Payroll tax paid by the business
    • Healthcare Benefits paid by the business ▪ Retirement Benefits paid by the business
  • Exclusions
    • Amounts over $100,000 for any one individual
    • Amounts for anyone residing outside the US
  • Adjustment for seasonal businesses available.

Use of Proceeds

  • Payroll costs including paid sick or medical leave, health insurance premiums, commissions
  • Mortgage payments and rent expense
  • Interest on debt incurred before February 15, 2020
  • Utilities

Loan Structure

  • Available during the covered period subject to funding.
  • Initial term of up to 12 months (full payment deferment during the initial term)
  • Rate of 4%
  • Payments deferred for up to 12 months (principal and interest)
  • A portion of the loan may be eligible to be forgiven after 6 to 12 months
  • Remaining loan amount not forgiven can be repaid on a term of up to 10 years
  • No Personal guarantee
  • No collateral
  • No fees
  • No prepayment penalties
  • 100% guarantees by the SBA for PPP loans through December 31, 2020 and 100% guarantee for
    unforgiven amounts converted to term loans.
  • Authority delegated to approved SBA lenders to make determinations on borrower eligibility
    without going through all of SBA the channels. The mechanics of applying are still being
    determined but it is anticipated to be an expedited process.
  • Documentation through the SBA

Loan Forgiveness

  • Borrower will be eligible for loan forgiveness equal to the amount spent by the borrower during an 8-week period after the loan origination date for the following:
    • Payroll costs (as defined below)
    • Interest payment on any mortgage incurred prior to February 15, 2020
    • Payment of rent on any lease in force prior to February15,2020
    • Payment on any utility for which service began before February15,2020
  • Eligible payroll costs do not include compensation above $100,000 for any one individual
  • The amount of forgiven loan will be reduced proportionally by any reduction in employees retained compared to the prior year and reduced by the reduction in pay of any employee beyond 25% of their prior year compensation.
  • To encourage employers to rehire any employees who have already been laid off due to Covid-19, borrowers that re-hire workers previously laid off will not be penalized for having a reduced payroll at the beginning of the period.
  • Allows forgiveness for additional wages paid to tipped workers
  • Borrowers will verify through documentation to lenders their payments during the period.
  • Cancelled indebtedness resulting from forgiveness of a PPP loan will not be included in the borrower’s taxable income.