CARES Act Paycheck Protection Program PPP CARES Act

CARES Act Paycheck Protection Program (PPP) • CARES Act provides relief for small businesses and their employees who are adversely affected by the outreach of COVID-19. • Includes Paycheck Protection Program (PPP), which provides emergency funding administered by the SBA under its authority. • CARES Act Amendment Changes: • $310 B additional for PPP • $30 B set aside for community financial institutions (less than $10 B in assets) • $30 B set aside for community financial institutions (between $10 -50 B in assets) • $50 B for EIDL • $10 B Emergency EIDL Grant • Agricultural enterprises eligible for EIDL (500 employees or less) 2

PPP • Funding from SBA Lenders • Guarantee Amount: 100% guarantee • Use of Loan Proceeds: • Payroll costs • Salary, wages <= 100 K, commissions • Vacation, sick leave, severance, health care benefits, retirement benefits • Employee salaries, commissions (capped at an annualized rate of $100 K per employee) • Mortgage interest payments • Rent/Utilities • Interest on pre-existing debt • Refinance of EIDL loan 3

PPP • Eligible Entities: • Small businesses • Agricultural Businesses: Ranchers/Farmers • Tribal businesses • Nonprofits [501(c)(3)] and veteran organizations [501(c)(19)] • Sole proprietors, independent contractors, self-employed individuals • Size Standards: • The applicable size standard will be the greater of: • (1) 500 employees; • (2) the applicant’s actual NAICS code standard; or • (3) SBA’s alternative size standard (<$15 M net worth and <$5 M annual revenue). • The number of employees includes FT, PT, and other. Doesn’t include independent contractors • Affiliation rules waived for businesses with multiple locations, < 500 employees per location, and a NAICS codes starting with 72 (Accommodations and Food Services) • Includes hotels and restaurants • Affiliation Rules waived for franchises listed in SBA’s franchise directory 4

PPP • Ineligible Entities: • Small business types such as: • • • Financial businesses primarily engaged in lending Passive businesses owned by developers/landlords Life insurance companies Pyramid sale distribution plans Gambling > 33% of total revenue Private clubs • Small businesses engaged in illegal activity • Small businesses with 20%+ owners with legal issues • Small businesses or owners that have currently defaulted federal loans or caused prior loss to federal government 5

PPP • Loan Terms: • Amount: Up to $10 million • Based on formula, not projections Equal to the lesser of: • 2. 5 x the applicant’s average monthly payroll costs over the last 12 months + the outstanding amounts on any EIDL loan obtained after January 20, 2020; or • If in business less than a year, use monthly average of payroll costs for January and February 2020 • Maturity – 2 years • Interest rate – 1% • Complete payment deferment -- for first 6 months 6

PPP • Multiple Loans: • Can’t have EIDL loan and PPP loan for the same purpose • Can refinance EIDL loan made after January 30, 2020 into PPP • Lender Evaluates Eligibility: • Applicant must be in operation on or before February 15, 2020 • Applicant must have employees for whom it paid salaries and payroll taxes • Reimbursement for Processing to Lenders: • SBA pay lender 5% up to $350 K; 3% between $350 K-$2 M; and 1% above $2 M • SBA pays within 5 days of loan disbursement 7

PPP • Waivers: • • Waives both guarantee fee and annual lender fee Waives credit elsewhere requirement Waives collateral and personal guarantee requirements Waives prepayment penalties • Guarantee Amount: 100% SBA guarantee 8

PPP • Forgiveness: • After expiration of the 8 -week period from initial loan disbursement, borrower may make request forgiveness of actual amounts spent on payroll costs, mortgage interest, rent, and utilities • Borrower must supply documentation to support the request – payroll tax filings, state filings, verification of mortgage and utility payments, along with a certification from its representative. • Payroll costs must account for at least 75% of the requested forgiveness amount • If the business reduces its number or compensation of employees during the 8 week period, the amount of forgiveness will be reduced • Employers that restore their employment numbers and salaries by June 30, 2020 would experience no reduction in forgiveness – applies to reductions from 2/15/20 through 4/26/20 9

Economic Injury Disaster Loans EIDL: These are direct loans made by SBA (not through private lenders) • Eligibility: • Small businesses – must meet SBA size standards (revenue or 500 employees or less) • Private non-profit organizations and small agricultural coops • Physically located in declared disaster area • Have suffered, or likely to suffer, substantial economic injury • No credit elsewhere (businesses show there is no credit elsewhere) • Independently owned and operated • Loan Terms: • Amount – Up to $2 million • Interest rate – 3. 75% for small businesses, 2. 75% for nonprofits. • Maturity – up to 30 years. Determined on a case-by-case basis, based upon each borrower’s ability to repay. 10

Economic Injury Disaster Loans EIDL: These are direct loans made by SBA (not through private lenders) • Use of Proceeds: • Pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. • May not be used to refinance long-term debt. The loans are not intended to replace lost sales or profits or for expansion. • Loan Requirements: • No credit elsewhere (businesses show there is no credit elsewhere) • Acceptable credit history • Repayment ability • All loans over $25, 000 must be secured with available collateral. SBA will not decline a loan for lack of collateral. SBA takes real estate when available. 11

Economic Injury Disaster Loans EIDL: These are direct loans made by SBA (not through private lenders) • There is no cost to apply • There is no obligation to take the loan if offered. • 1 -800 -659 -2955 or email disastercustomerservice@sba. gov • New Process: • Independent Contractor: to process and filter the applications. It can process 2, 000 applications per second. We currently have hundreds of thousands of applications that have been received. Soon will be able to turn around applications in 3 -5 days. • 2 Tier Call System: (1) Basic Customer Service…onboarding 3, 000+ agents to answer basic questions (will be available 24/7); (2) Technical Questions…onboarding 500 FEMA employees to assist ODA in answering questions 12

Emergency EIDL Grants EIDL Advance • Expand eligibility for entities suffering economic harm due to COVID-19 and giving SBA more flexibility to process and disperse small dollar loans. • Grant amount: Up to $10 K • Covered period: 1/31/20 – 12/31/20 • Issued: within 3 days of application • Eligible entities: • • Small business concerns Private nonprofit orgs Agricultural Enterprises Self-certification 13

Emergency EIDL Grants EIDL Advance • Waivers: • Personal guarantees, 1 -year in business requirement • Use of Proceeds: • • • Payroll Provide paid sick leave Paying rent Mortgage payments Service other debt obligations • Approved: • Solely on credit score or alternative method to determine repayability 14

Emergency EIDL Loan and Grants Application Process • If you get an EIDL Loan: • You can still get the EIDL Advance but it will be subtracted from your EIDL • SBA Web Portal: • incorporates EIDL grants • Existing EIDL Borrowers: • not related to COVID-19 are eligible to apply but can’t refinance into PPP 15

CONTACTS District Office • Main Line: • Email: • Office of Disaster Assistance: • Sba. gov/Disaster • disastercustomerservice@sba. gov • Call: 1 -800 -659 -2955 16