Paycheck Protection Program

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) which contains the Paycheck Protection Program. The Paycheck Protection Program provides for up to $349 billion in loans to eligible small businesses under Section 7(a) of the Small Business Act. The following answers questions regarding the scope of the program. 

Eligibility under the Program

Small businesses that were in existence on Feb. 15, 2020 and with 500 or fewer employees, based on the Small Business Administration’s small business size threshold, are eligible to take advantage of this program.  The SBA size standard for the printing industry is 500 employees, so any facility with fewer than 500 employees can apply. The relevant NAICS codes for our industry are: 

• 323111, Commercial Printing (except screen and books);
• 323113, Screen printing.  Digital printing falls under the 323111 NAICS code.
• 323117, Books Printing
• 323120, Support Activities for Printing

You can apply for loans through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. You should consult with your local lender as to whether it is participating in the program.

When Can I Apply?

Applications can be filed beginning April 3rd, so facilities are encouraged to take steps now to determine whether they are likely to qualify for the program and begin to collect the necessary documentation that can help in that threshold determination.

Lenders may begin processing loan applications as soon as April 3, 2020. The SBA has provided the following sample form so you can start to collect the required information. 

The form can be found here. (PDF) (Updated April 3.)

What Can the Funds be Used For?

Funds can only be used to retain workers and maintain payroll or to make mortgage payments, lease payments, and utility payments. Specifically, funds may be used for the following costs incurred between Feb. 15, 2020 and June 30, 2020:

• Payroll costs, including salary or wages, family and sick leave, allowance for dismissal or separation, healthcare benefits, retirement benefits, payment of state and local taxes assessed on the compensation of an employee, and the sum of payments to an independent contractor.
• Payments on a mortgage obligation.
• Rent or lease payments.
• Utilities
• Interest on any other debt obligations that were incurred before Feb. 15, 2020.
• Funds cannot be used for sick or family leave where a payroll tax credit is already claimed, salaries in excess of $100,000, and compensation of employees outside of the US.

How much can be borrowed under the Paycheck Protection Program?

Eligible borrowers can borrow up to $10M determined as follows:

Multiply the average total monthly payments for payroll costs incurred during the one-year period before the date the loan was issued by 2.5 or $10,000,000. The recipient shall receive the lesser of the two. For seasonal employers, the average total employees shall be calculated for the period between February 15, 2019 and June 30, 2019.

The interest rate for these loans is fixed at 4%.  No personal guarantees are required for PPP Loans and all are 100% guaranteed by the United States Government.

Does the Loan Need to be Repaid?

PPP Loans are subject to forgiveness, in whole or in part, for certain “covered expenses” incurred during the 8-week period following the date of the PPP Loan. Covered expenses are:

• Payroll costs
• Interest on covered mortgage obligations
• Rent obligations
• Utilities

The amount of principal that is forgiven is not included in gross income for tax purposes.

PPP Loan forgiveness is subject to formulaic reduction by multiplying the maximum forgiveness amount by the quotient obtained by dividing:

The average number of full-time employees employed during the 8-week period commencing on the date of the loan by either (as selected by the borrower): the average number of full-time employees per month employed during the period February 15, 2019 through June 30, 2019; or

The average number of full-time employees per month employed during the period January 1, 2020 through February 28, 2020 (unless a seasonal employer, in which case it is the average monthly full-time employees between February 15, 2019 and June 30, 2019).

How do I get forgiveness on my PPP loan?

PP Loan forgiveness is also subject to further reduction by the amount of any reduction in total salary or wages of any employee earning less than $100,000 in annual salary during the 8 week period following the making of the PPP Loan that exceeds 25 percent of the total salary or wages of the employee during the most recent full quarter during which the employee was employed prior to the 8 week measurement period. This further reduction can be mitigated to the extent that there has been a workforce or salary reduction if the company increases its workforce or the salary/wages it pays its employees by June 30, 2020.

To obtain loan forgiveness, you must apply through your lender for forgiveness on your loan. In this application, you must include: Documentation verifying the number of employees on payroll and pay rates, including IRS payroll tax filings and State income, payroll and unemployment insurance filings; documentation verifying payments on covered mortgage obligations, lease obligations, and utilities; certification from a representative of your business or organization that is authorized to certify that the documentation provided is true and that the amount that is being forgiven was used in accordance with the program’s guidelines for use.

SGIA is in the process of reviewing all loan opportunities available for the industry. This information will be updated as new information becomes available. For questions, please contact govtaffairs@sgia.org.