In this unprecedented era of COVID-19 — a health and economic crisis impacting every facet of our society — it’s critical for small businesses to stay informed about special SBA financing that will help businesses keep their workforce employed. Centric Bank is a small business champion and a certified SBA lender to guide you through the Coronavirus Aid, Relief, and Economic Security (CARES) Act Paycheck Protection Program loan application.
Through the CARES Act, the President has created a new type of Small Business Administration loan. Nearly $350 billion was approved to help sustain, support, and be a lifeline for small businesses in America, especially the nearly one million in Pennsylvania.
“It’s the most exciting part of the package,” said U.S. Treasury Secretary Steven Mnuchin. It is designed for “getting Americans back to work.”
As a PA Eastern District SBA lending leader, Centric Bank is providing personal guidance and easy access to financial relief for any small business or non-profit impacted by loss of business during COVID-19 and the Gov. Tom Wolf’s stay-at-home order.
“The success and health of our small business community is a top priority,” said Patricia (Patti) A. Husic, President and CEO of Centric Bank. “We pride ourselves on financing new frontiers and supporting and strengthening Main Street and the job creators. The Paycheck Protection Program application process is easy and accessible on our Centric Bank website today.”
The Paycheck Protection Program supports the loss of income to businesses that have been impacted through COVID-19. The loans made through the Paycheck Protection Program are 100 percent guaranteed.
- The Coronavirus Aid, Relief, and Economic Security (CARES) Act allocated $350 billion to help small businesses keep workers employed during the pandemic and economic downturn with businesses being closed due to sheltering in place.
- The loans may be forgiven if borrowers maintain their payrolls during the crisis or restore their payrolls afterward.
What businesses should know:
- Small business and sole proprietors may apply. Click here to begin the application, or call 888-274-2033 or 717-657-7727.
- Starting April 10, 2020, independent contractors and self-employed individuals can apply.
- Am I eligible? Yes, if you meet the following criteria:
- A small business with fewer than 500 employees (includes both full-time and part-time employees).
- A 501(c)(3) with fewer than 500 employees.
- An individual that is operating as a sole proprietor, independent contractor, or is self-employed.
- A business that was in operation before Feb. 15, 2020.
- These loans do not require collateral or guarantees.
- These loans are not the same as the SBA’s Disaster Assistance Loans currently offered; these loans are potentially forgivable up to 100 percent of principal amount borrowed.
- Businesses and non-profit organizations may apply.
- The SBA encourages you to apply as quickly as possible because there is a funding cap.
What are lenders like Centric Bank looking for?
- A completed two-page SBA application.
- The application to be submitted to the financial institution through a secure portal or channel.
- Good Faith Certification and Affidavit from the Business that confirms the following:
- The uncertainty of current economic conditions makes the loan necessary to support ongoing operation.
- Borrower will use the loan proceeds to retain workers and maintain payroll, or make mortgage or rent payments, and utility payments.
- Borrower does not have an application pending for a loan duplicative of the purpose and amounts applied for here.
How much can I borrow? Loans are up to 2.5 times the borrower’s average monthly payroll costs, not to exceed $10 million.
What is included in payroll costs?
- Salaries, wages, commissions.
- Payment of sick leave, vacation time, family, or medical leave.
- Payment for the provisions of group health care benefits including insurance premiums.
- Payment of any retirement benefit.
- Payment of state or local tax assessed on the compensation of the employee.
- Compensation of an individual employee in excess of an annual salary of $100,000.
- Payroll taxes.
- Compensation of an employee who principal place of residence is outside of the U.S.
- Qualified sick leave wages for which a credit is allowed under Families First.
- Payroll costs are capped at $100,000 on an annualized basis for each employee. Due to likely high subscription, it is anticipated that not more than 25 percent of the forgiven amount may be for non-payroll costs.
How do I know if my loan will be forgiven?
- Borrower is eligible for loan forgiveness equal to the amount the borrower spent on the following items during the eight-week period beginning on the date of the origination of the loan, including the payroll costs (defined above), interest on a mortgage obligation of the business, rent on a leased facility, payments on utilities (electric, gas, water, telephone, internet, transportation).
- The loan forgiveness will not exceed the principal amount of the loan.
- Forgiveness will be determined in Q3 or Q4 and will require additional documentation to the SBA.
- The reductions in wages or employment from Feb. 15, 2020, ending 30 days after the enactment of the CARES Act, will not reduce the amount eligible for in salaries IF by June 30, the borrower eliminates the reduction in employees or reduction in wages.
- The business will not pay any loan fees.
- There is a six-month deferment of payments.
- The terms of the loan deemed non-forgivable will have a maximum interest rate of .50% and a term of two years.
- The business will need to submit a copy of the 941 quarterly taxes over the past 12 months, amount of rent, insurance premiums, utilities, or mortgage interest.
What small businesses DO NOT need to submit to the bank for the Paycheck Protection Program:
- No personal financial statement required.
- No listing of sales revenues, liabilities or the related details of the businesses debt, including other SBA loans.
- No authorization for a Tax Transcript from the IRS needed.
In addition, if the business is not a current customer of Centric Bank, the bank will also need a copy of the most recent federal tax return sent through our secure portal to confirm NAICS, legal name, date of formation, and ownership.