Paycheck Protection Program

The following expenses are eligible for forgiveness:

• Payroll costs (as described in the Interim Final Rule 1), including compensation to owners (as described in Interim Final Rule 3) that are paid or incurred during the Covered Period or Alternate Covered Period (at the election of the borrower).
  • Payroll costs incurred but not paid during the Borrower’s last pay period of the Covered Period (or Alternative Payroll Covered Period) are eligible for forgiveness if paid on or before the next regular payroll date
  • Payroll costs that were both paid and incurred can only be counted once toward the forgiveness amount
• Non-Payroll costs paid or incurred during the Covered Period.  Non-payroll costs incurred during the Covered Period must be paid on or before the next regular billing date, even if the billing date is after the Covered Period. Non-payroll costs may not exceed 25% of the loan forgiveness request. The following non-payroll costs are eligible for forgiveness:
  • Interest on business mortgage obligations (not including the pre-payment of interest or any payment of principal) entered into before February 15, 2020
  • Business rent/lease payments (on real or personal property) if the lease was entered into before February 15, 2020
  • Business utility payments (e.g., electricity, gas, water, transportation, telephone, internet access) if the service began before February 15, 2020

Covered Period and Alternate Payroll Covered Period are both defined in the SBA Borrower PPP Loan Forgiveness Application.

You will be required to submit documentation supporting your application for loan forgiveness.  Below is a summary of documentation requirements outlined in the SBA Borrower PPP Loan Forgiveness Application:

• The SBA-issued PPP Loan Forgiveness Calculation Form
• The SBA-issued PPP Schedule A Worksheet
• Payroll documentation verifying the eligible employee cash compensation and non-cash benefit payments consisting of each of the following:
  • Bank account statements or third-party payroll service provider reports;
  • Tax forms; and
  • Payment receipts, cancelled checks, or account statements
• Documentation of full-time equivalency (FTE) employees showing:
  • Average number of FTE employees on payroll each month between February 15, 2019 and June 30, 2019; and
  • Average number of FTE employees on payroll each month between January 1, 2020 and February 29, 2020
  • Seasonal employers can provide the average number of FTE employees on payroll each month between February 15, 2019 and June 30, 2019; between January 1, 2020 and February 29, 2020; or for any consecutive twelve-week period between May 1, 2019 and September 15, 2019.
• Non-payroll documentation verifying the existence of obligations before February 15, 2020 and eligible payments from the covered period.  Examples include:
  • Business mortgage interest payments: copy of lender amortization schedule and receipts or cancelled checks; or lender account statements verifying interest amounts and eligible payments.
  • Business rent or lease payments: copy of current lease agreement and receipts or cancelled checks; or lessor account statements verifying eligible payments.
  • Business utility payments: copy of invoices and receipts, cancelled checks, or account statements verifying those eligible payments.

If you do not provide supporting documentation, the loan will not be eligible for forgiveness.

Loan forgiveness may be reduced by:

• A reduction in the number of FTE employees that you employ, or reductions in your employees’ salaries and wages.
• The receipt of an Economic Injury Disaster Loan (EIDL) emergency grant from the SBA.
• Use of PPP loan proceeds for unauthorized purposes.

Borrowers will be responsible for repaying any amounts not forgiven by the SBA.  Any loan amount not forgiven will have a fixed interest rate of 1.00% for a period of two years. Payments will be deferred for 6 months following origination of the loan.

Up to 100% of the principal amount and any accrued interest of the loan may be forgiven if you use the proceeds on qualifying expenses. However, there are certain actions that may reduce the amount of forgiveness, such as reducing the number of employees or reducing employee salaries or wages.  Only up to 25% of the forgiven loan amount can be for non-payroll costs.

Outstanding loan amounts bear interest at a fixed rate of 1.00%.  The term of the loan is 2 years, however, all payments are deferred for a period of 6 months from the initial disbursement.  At the end of the deferral period, any accrued interest that hasn’t been forgiven will be due.

Any principal balances not forgiven will be amortized over an 18 month period following the deferral period.  Monthly payments of principal plus interest will begin after the deferral period.

PNC will alert borrowers with an email notification following the 8-week period from initial loan disbursement.  Borrowers will be provided login credentials and instructions on how to initiate the loan forgiveness process through PNC’s digital portal.

PNC is not accepting forgiveness applications at this point in time.  PNC will directly prompt borrowers to complete a digital version of the SBA Borrower Loan Forgiveness Application after the end of the 8-week period following the initial loan disbursement.

No.  PNC will open a digital version of the SBA Borrower Forgiveness Application for borrowers to leverage once we are able to take forgiveness applications.  We are not accepting paper applications at this time.

PNC anticipates providing borrowers with their SBA PPP Loan Number and Lender PPP Loan Number through the digital portal.

Borrowers can reference the accompanying instructions in the PPP Loan Forgiveness Application or consult their advisors (accountants or attorneys) with questions.  SBA has also indicated that it will issue new regulations and guidance to further assist borrowers as they complete their applications in the near future.

In general, payroll documentation, FTE headcount documentation, and nonpayroll documentation will be required. Borrowers can refer to the specific documentation requirements outlined on Page 10 of the SBA PPP Loan Forgiveness Application.

The PPP is a federal loan program that helps small- and medium-sized businesses impacted by the coronavirus (COVID-19) to retain their workforce. The loan is an SBA 7(a) loan with the following terms:

• 1.00% fixed interest rate.
• Deferred payments for 6 months.
• Repaid over a 2-year term.
• Up to 100% of the principal and accrued interest may be forgiven after 8 weeks.

The Paycheck Protection Program was signed into law in the wake of the COVID-19 global health crisis. One of this program’s significant features is that you can apply for loan forgiveness after receiving the funds. Forgiveness can be up to 100% of the loan and accrued interest.  Another unique feature is the loan deferment, meaning you won’t have to pay principal and interest on your loan for the first 6 months.

This loan will be packaged as an SBA 7(a) loan program. Businesses can apply through PNC Bank, a preferred SBA lender (or another qualified SBA lender). SBA and PNC Bank application fees will be waived for all borrowers. Lenders will have delegated authority to make and approve loans without requiring SBA review or approval – this streamlined process is designed to get capital in the hands of businesses quickly. If you are a current PNC customer, your Business Banker or Relationship Manager can show you how to apply.

Small- and medium-sized businesses that were in operation on or before February 15, 2020 with 500 or fewer full- or part-time employees (independent contractors can apply on their own and do not count toward the employee count), are generally eligible to apply for this loan. Additionally, the business must have paid employee salaries and payroll taxes (or paid independent contractors, as reported on a Form 1099-MISC).

Businesses with more than 500 employees may still qualify for the program by meeting the SBA’s definition of a “small business concern.” A business may also qualify if it meets the SBA employee-based or revenue-based size standard corresponding to its primary industry. Details on SBA size standards can be found here.

Calculate your maximum loan amount by multiplying your business’s average monthly payroll costs by 2.5. For most businesses, average monthly payroll costs will be based on the full 2019 calendar year or another consecutive period of twelve months ending in January, February, or March 2020. Your monthly payroll includes wages, tips, group health, retirement benefits and employer-paid taxes, but excludes the amount of compensation to individuals in excess of $100,000 and compensation paid to independent contractors. The maximum loan amount is the lesser of that value or $10,000,000.

Seasonal businesses may use average monthly payroll costs for the period between February 15, 2019, or March 1, 2019, and June 30, 2019. Recently established businesses may use average monthly payroll costs for the period from January 1, 2020 through February 29, 2020 if they were not in operation for a full twelve months.

In order to submit your application online, you will need to print application materials, sign, scan, and upload documents.

Based on current guidance, you should gather the following documents to apply for a Paycheck Protection Program loan:

• IRS payroll tax filings (e.g., 940, 941, 944)
• 2019 1099-MISCs (for applicants filing as independent contractors)
• Payroll processor records
• Health insurance premium expenses (required if group healthcare costs are included in payroll calculations)
• Retirement plan expenses (required if payments into retirement accounts are included in payroll calculations)
• Other supporting documentation for the relevant time period (e.g., income and expense statements)

You will need these documents for the relevant time period. For most non-seasonal businesses, this time period will be the full calendar year 2019 (or a consecutive twelve-month period ending in the first quarter of 2020). For seasonal or recently established businesses, it may be shorter.

No, payments to independent contractors do not count toward a company's payroll costs used to calculate the PPP loan amount. Independent contractors can directly apply for a PPP loan on their own.

No. The Paycheck Protection Program does not require collateral or a personal guarantee.

Timing is dependent on your accurate completion and submission of information to PNC Bank and volume of requests. Once PNC Bank approves your loan, the SBA registers it and an executed promissory note is delivered to PNC Bank, funds can be disbursed as fast as possible by wire transfer or ACH payment directly into your PNC business deposit account.

Approved uses of proceeds include:

• Payroll costs (at least 75% of all loan proceeds must be used for payroll costs)
• Costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums
  
• mortgage interest payments (but not mortgage prepayments or principal payments)
• rent payments
• utility payments
• interest payments on any other debt obligations that were incurred before February 15, 2020; and/or
• refinancing an SBA Economic Injury Disaster Loan (EIDL) made between January 31, 2020 and April 3, 2020.

The interest rate for Paycheck Protection Program loans is set by the SBA and is 1.00%.

The program is administered by SBA lenders and loans may be originated through June 30, 2020 contingent upon the availability of program funds.

There may be more applicants and requests for loans than available funds from the SBA. If that occurs, not every qualified applicant will receive loan proceeds under the Paycheck Protection Program.

The Paycheck Protection Program loan will not affect your future SBA loan funding or total dollars allowed from the SBA.

Yes, customers can use the Paycheck Protection Program loan proceeds to pay PNC Bank interest. However, any amount applied to non-mortgage debt or principal payments will not qualify for loan forgiveness.

If you are a current PNC Bank customer, reach out to your Business Banker or Relationship Manager. If you are not a PNC customer, we encourage you to research your options on our website and determine which program is the best fit for your business.

No. The Government limits each eligible borrower to only one PPP loan. This means that if you apply for a PPP loan you should consider applying for the maximum amount that you are eligible to receive.

Starting today, with the issuance of the final rule, borrowers cannot apply for both an Economic Injury Disaster Loan (EIDL) and a PPP loan:

• Note, if a borrower received an EIDL between January 31, 2020 and April 3, 2020 it does NOT impact their ability to apply for a PPP loan.
• If an EIDL loan received between January 31, 2020 and April 3, 2020 was used for payroll costs, your PPP loan must be used to refinance your EIDL loan (and the amount of the PPP loan is increased by the outstanding EIDL, subject to the $10mm cap).

It’s critical for you to weigh all options available to you to ensure the best financial decision for your business. To apply for an EIDL, you must apply directly through the Small Business Administration. More information on the EIDL can be found here.

Small Business Administration (SBA) Loans with PNC

SBA COVID-19 Disaster Assistance