Signature Bank is Working with the SBA on Coronavirus Relief Fund
We are here to help you and your business.
Signature Bank is proud to work directly with the U.S. Small Business Administration to implement the Coronavirus Aid, Relief, and Economic Security (CARES) Act, to help provide relief to businesses who have been impacted by the COVID-19 pandemic.
The current government stimulus package includes nearly $350 billion allocated for the Paycheck Protection Program intended to help businesses. Details of the program can be found below. We are anxious to get started helping you during this difficult time.
As a relationship bank, we are always involved and on the front lines with our customers—and we want to reiterate that we are here for you.
Together, we will meet the challenges that may lie ahead in the weeks to follow. For more information or to start the application process, please contact your Signature Bank Relationship Manager.
SBA 7(a) Paycheck Protection Loan Program
As part of the $2 Trillion Government Stimulus package, the Paycheck Protection Program enables loans of up to $10 million for small businesses impacted by COVID-19. The program is designed to help businesses cover payroll and overhead expenses. The following are the key aspects of the Paycheck Protection Program.
- Small businesses, 501(c)(3) nonprofit, a 501(c)(19) veteran’s organization, or Tribal business concern described in section 31(b)(2)(C) of the Small Business Act with not more than 500 employees, or the applicable size standard for the industry as provided by SBA, if higher. Applications accepted starting April 3, 2020.
- Sole-proprietors, independent contractors, and other self-employed individuals as eligible for loans Applications accepted starting April 10, 2020.
- Businesses with more than one physical location qualify so long as total combined employees are 500 or fewer (unless the businesses operated under NAICS code beginning with 72) or otherwise meet the SBA’s size standard based on NAICS code.
- Waives affiliation rules for businesses in the hospitality and restaurant industries, franchises that are approved on the SBA’s Franchise Directory, and small businesses that receive financing through the Small Business Investment Company (SBIC) program.
- Applies current SBA affiliation rules to eligible nonprofits.
- Businesses must be operational as of February 15, 2020 with employees for whom it paid salaries and payroll taxes, or a paid independent contractor.
Calculating Total Loan Amount
- Average eligible monthly payroll costs, excluding compensation above $100,000 in wages (based on prior 12 months) multiplied by 2.5 (represents months) – plus – the balance of any SBA Loan closed between 1/31/2020 and when this loan will be made, if applicable – OR – $10 million whichever is less.
Allowable Use of Proceeds
- Allowable uses of the loan include eligible payroll support (eligible employee salaries which excludes compensation above $100,000 in wages, paid sick or medical leave, insurance premiums), interest paid on a mortgage (excludes any prepayment of or payment of principal) or rent, and utility payments.
- The interest rate is 1.00% fixed rate.
Term of Loan
- 10-year full payout loan. There will be no prepayment penalty. Allows for complete deferment of SBA 7(a) Loan payments for one year
- The loan will be unsecured.
- Personal guarantees are not required.
- The Credit Elsewhere Rule does not apply.
Other Conditions and Requirements
- Cannot apply for any other programs through the SBA for the same purpose.
- If a borrower has an EIDL Loan unrelated to COVID-19, borrower is still eligible.
- The emergency EIDL grant award of up to $10,000 would be subtracted from the amount forgiven under the Paycheck Protection Program.
- Eligible borrowers will be required to make a good faith certification that the loan is necessary due to the uncertainty of current economic conditions caused by COVID-19; they will use the funds to retain workers and maintain payroll, lease, and utility payments; and are not receiving duplicative funds for the same uses from another SBA program.
Loan Repayment and Forgiveness
- The borrower is eligible for loan forgiveness equal to the amount spent by the borrower during an 8-week period after the origination date of the loan on eligible payroll costs, interest payments on any mortgage incurred prior to February 15, 2020 (excludes principal and prepayments), payment of rent on any lease in force prior to February 15, 2020, and payment on any utility for which service began before February 15, 2020. Amounts forgiven may not exceed the principal amount of the loan.
- Forgiveness on a covered loan is equal to the sum of the following: eligible payroll costs (excludes compensation above $100,000 in wages) incurred during the covered 8 week period compared to the previous year or time period, proportionate to maintaining employees and wages: eligible payroll costs plus any payment of interest on any covered mortgage obligation (excludes any prepayment of or payment of principal on a covered mortgage obligation) plus any payment on any covered rent obligation + and any covered utility payment. Borrowers will verify these payments through documentation required by lenders, such as (but not limited to) IRS Payroll Expense Forms 940 and 941, mortgage statements, lease statements and utility statements.
- The amount forgiven 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 percent of their prior year compensation. To encourage employers to rehire any employees who have already been laid off due to the COVID-19 crisis, borrowers that re-hire workers previously laid off will not be penalized for having a reduced payroll at the beginning of the period.
- Canceled indebtedness resulting from this section will not be included in the borrower’s taxable income.
- Any loan amounts not forgiven at the end of one year are carried forward as an ongoing loan with terms of a max of 10 years at 4% interest. The 100% loan guarantee remains intact.
Documentation to Process SBA 7(a) Relief Loan:
- Completed Application (expected to be available from the SBA shortly).
- SBA Form 1919 or corresponding SBA Form 912, if applicable.
- Articles of Incorporation/Organization of each borrowing entity
- By Laws/Operating Agreement of each borrowing entity
- All owners Driver’s Licenses
- Payroll Expense verification documents to include:
- IRS Form 940 and 941
- Payroll Summary Report with corresponding bank statement
- If a Payroll Summary Report is not available, Employee Pay Stubs as of February 15, 2020 (or corresponding period) with corresponding bank statement, and,
- Breakdown of payroll benefits (vacation, allowance for dismissal, group healthcare benefits, retirement benefits, etc.
- 1099s (if Independent Contractor)
- Certification that all employees live within the United States. If any do not, provide a detailed list with corresponding salaries of all employees outside the United States
- Trailing twelve-month profit and loss statement (as of the date of application) for all applicants
- Most recent Mortgage Statement or Rent Statement (Lease)
- Most recent Utility Bills (Electric, Gas, Telephone, Internet, Water)