PPP Loan Update – Additional Funding

As of today, April 27, the U.S. Small Business Administration (SBA) has resumed accepting applications for the Paycheck Protection Program (PPP).

Our partners at Newtek Business Services continue to accept inquiries for PPP loans. We partnered with Newtek to provide PPP loans for OneAZ members who own a business, regardless of whether you have a business account with us.

If you have previously submitted an application with Newtek, you do not need to take any action at this time to qualify for the additional funding; Newtek will continue to process your original application. If you have not yet applied, we recommend that you do so quickly. We expect that this round of funding will be exhausted quickly.

financial assistance for businesses

 

Important information regarding the SBA’s Paycheck Protection Program loans.

We are pleased to announce that OneAZ has formalized a partnership with Newtek Business Services Corporation. This partnership will allow our members to apply for and receive a PPP loan, subject to SBA and lender approval and funding. This partnership extends to all OneAZ members who own a business or are self-employed, regardless of whether they currently have a business account with us.

Before applying through Newtek, please read the following guidelines:

  • Lenders across the nation are experiencing an extremely high volume of PPP loan applications. Please be prepared and know that obtaining a PPP loan may be a long process.
  • All PPP loans will be handled in their entirety by our partners at Newtek Business Services. OneAZ will not handle inquiries on your loan’s status, timing, or provide any other information regarding your loan application. 
  • All questions, service requests and payments will be handled exclusively by Newtek, and inquiries must be directed to them. Once you begin an application with Newtek, they are the sole party involved in your PPP loan until it is paid off.
  • While OneAZ is confident in Newtek and their capabilities as an SBA lender, OneAZ Credit Union is not responsible for, and exercises no control over the Newtek Business Services Corporation website or the services it provides. OneAZ does not represent either Newtek or the user if the parties enter into a transaction. This means that OneAZ will not be liable for any issues or claims you may have with services from Newtek.
  • OneAZ will not share any nonpublic personal information for a OneAZ member with Newtek. We have not verified the accuracy, privacy or security of the information collected by Newtek. Privacy and security policies of the Newtek website may differ from those practiced by OneAZ and OneAZ is not responsible for Newtek’s privacy and information security practices or controls.

In order to prepare for the PPP application process, we recommend you gather the following documents (as applicable). Please note that additional information may be required by the lender.

  • Salary, Wages, Commission – payroll (or other) reports showing gross earnings (for example, IRS W-3; IRS 941; IRS 944)
  • Group Health Benefits – payroll (or other) reports showing gross earnings or documentation from your insurance vendor showing employer payments
  • Retirement Benefits – payroll (or other) reports showing gross earnings or documentation from your retirement benefit vendor showing employer payments
  • State/Local Tax Assessed on Compensation of Employees – payroll (or other) reports showing gross earnings or State/Local payroll tax filings
  • Salary, Wages, Commission – payroll (or other) reports showing gross earnings (for example, IRS W-3; IRS 941; IRS 944)
  • Group Health Benefits – payroll (or other) reports showing gross earnings or documentation from your insurance vendor showing employer payments
  • Retirement Benefits – payroll (or other) reports showing gross earnings or documentation from your retirement benefit vendor showing employer payments
  • State/Local Tax Assessed on Compensation of Employees – payroll (or other) reports showing gross earnings or State/Local payroll tax filings


If you are an independent contractor or sole proprietorship, you should prepare to provide the following:

  • Independent Contractors – 1099-MISC or other documentation showing earnings
  • Sole Proprietorships – Statement of Income and Expenses or similar documentation

 

Click to Apply for a Paycheck Protection Program Loan

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OneAZ Credit Union (OneAZ) is not responsible for and exercises no control over the Newtek Business Services, Corp. (Newtek) web site or the services it provides. OneAZ does not represent either Newtek or the user if the parties enter into a transaction. Therefore, OneAZ will not be liable for any issues or claims you may have with services from Newtek. OneAZ will not share any nonpublic personal information of any OneAZ member with Newtek. We have not verified the accuracy, privacy, or security of the information collected by Newtek. Privacy and security policies of Newtek web site may differ from those practiced by OneAZ and OneAZ is not responsible for Newtek’s privacy and information security practices or controls. When you click on a link, you can see if you have left the OneAZ web site by checking the address line in your browser: the address will no longer begin with OneAZcu.com.

Paycheck Protection Program FAQ’s

Is it true that the only way to obtain a PPP loan is through my existing bank or credit union?
No, there is no SBA requirement that a business obtain a PPP loan only through its existing bank. There are some lenders that will provide PPP loans to current customers/members and non-customers/members alike, while other lenders may require an existing relationship in order to obtain a PPP.

I have heard that any bank or credit union should be able to do these loans. Why are some banks and credit unions not participating in the PPP loan program?
While all insured financial institutions are qualified to offer PPP loans, not all financial institutions have the authorizations, systems and processes required and in place to participate in the program. Financial institutions that already participated in certain SBA programs prior to the COVID-19 crisis were were 95% ready to process PPP loans, while institutions that did not currently participate in those programs must meet specific requirements before being able to process PPP loans.

Why is OneAZ Credit Union working with a partner to provide PPP loans rather than doing them in-house?
While OneAZ prefers to serve our members directly, the COVID-19 crisis has created a unique situation. Our priority is to do what is best for our members, and in this instance we came to the conclusion that the tremendous demand for PPP loans would exhaust our resources and potentially put our members in a situation where their ability to obtain funds would be compromised. Working with a partner equipped to process the volume of loan requests allows us to give our members a solution and ensure that they have access to the funding they need, handled by an experienced provider.

How long does it take to get a PPP loan?
Due to the volume and complexity of providing PPP loans, we expect this to be a lengthy process. At this time, we do not have an estimate of how long it may take.

I don’t have employees; can I still qualify?
In many cases, yes. The CARES Act states that “individuals who operate under a sole proprietorship or as an independent contractor and eligible self-employed individuals shall be eligible.” Applicants who fall in this category must provide documentation such as “payroll tax filings reported to the Internal Revenue Service, Forms 1099-MISC, and income and expenses from the sole proprietorship, as determined by the (SBA) Administrator and the (Treasury) Secretary.”

Can franchises obtain a PPP loan?
Franchises and hospitality businesses (NAICS code 72) with multiple locations, even if they have more than 500 employees, may be eligible on a per-location basis as well as any businesses receiving financial assistance from a Small Business Investment Company (SBIC).

How much money can I borrow?
The maximum loan amount is 2.5 times the average monthly payroll for the 12 months preceding the date the loan is made, up to a maximum of $10 million.
If you are a seasonal business, the calculation is slightly different. Seasonal businesses can apply to borrow 2.5 times your average payroll for either the 12-week period beginning February 15, 2019 and ending May 10, 2019, or the period of March 1, 2019 through June 30, 2019.

For businesses that were not in business for the time period beginning on February 15, 2019 and ending on June 30, 2019, you can use your average total monthly payroll costs incurred from January 1, 2020 to February 29, 2020 and multiply that by 2.5.

Payroll does not include total annual salaries in excess of $100,000 or qualified sick leave pay under the Families First Coronavirus Response Act.

What can PPP loan funds be used for?
Loan proceeds may be used for the following expenses, some of which may be eligible for forgiveness if certain conditions are met:
Payroll costs

  • Costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums
  • Employee salaries, commissions, or similar compensations
  • Payments of interest on any mortgage obligation (but not to pay principal or to prepay a mortgage)
  • Rent (including rent under a lease agreement)
  • Utilities
  • Interest on any other debt obligations that were incurred before the covered period
  • Refinancing an SBA EIDL loan made between January 31, 2020 and April 3, 2020

Do I have to prove that I can’t get credit elsewhere?
No, the SBA is waiving this requirement for PPP loans.


Is it true that some or all the PPP balance is “forgivable”?
Yes, provided the funds are used for very specific purposes, the balance will be eligible for forgiveness. Amounts eligible for forgiveness includes up to 8 weeks of expenses in the following categories:

  • Up to 8 weeks of payroll, subject to employee retention requirements
  • Interest on a commercial mortgage
  • Rent on your commercial property
  • Utilities on your commercial property

It is important to note that no more than 25% of the forgiven amount can be attributed to non-payroll costs.

Can I take out more than one PPP loan?
No.

Does the PPP offer a $10,000 forgivable grant?
No. The advance of up to $10,000 is part of the Economic Injury Disaster Loan (EIDL) program, not Paycheck Protection Program Loans. EIDLs are handled in their entirety by the SBA, and you can learn more and apply at SBA.gov.

Can I apply for both a PPP loan and an EIDL (Economic Injury Disaster Loan)?
Yes, but you are prohibited from receiving funds from both loan programs for the same purpose. If you have applied for or received an EIDL prior to applying for a PPP, please notify your PPP lender during the application process.

What happens if I reduce my workforce or lay off employees? Can my loan still be forgiven?
Your loan forgiveness will be reduced if you decrease your full-time employee headcount during the 8-week period following loan origination. It will also be reduced if you decrease salaries and wages by more than 25% for any employee who made less than $100,000 annually in 2019. You may also receive forgiveness for additional wages paid to tipped workers.

What counts toward qualified payroll expenses?
The CARES Act states that payroll includes:

  • Salary, wages, commissions or similar compensation
  • Payment of cash tips or equivalent (based on employer records of past tips or, in the absence of such records, a reasonable, good-faith employer estimate of such tips)
  • Payment for vacation, parental, family, medical, or sick leave
  • Allowance for dismissal or separation
  • Payment required for the provisions of employee benefits including insurance premiums
  • Payment of any retirement benefit
  • Payment of State or local tax assessed on the compensation of employees
  • For sole proprietors or independent contractors, wages, commission, income, or income from net earnings from self-employment, or similar compensation.

It does not include:

  • The compensation of an individual employee in excess of an annual salary of $100,000, as prorated for the covered period
  • Federal employment taxes imposed or withheld between February 15, 2020 and June 30, 2020, including the employee’s and employer’s share of FICA (Federal Insurance Contributions Act) and Railroad
  • Retirement Act taxes, and income taxes required to be withheld from employees
  • Any compensation of an employee whose principal place of residence is outside the United States
  • Qualified sick and family leave wages for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act

Are employee benefits counted toward the $100,000 annual compensation cap?
No. The CARES Act excludes from the definition of payroll costs any employee compensation in excess of an annual salary of $100,00. According to the SBA, the exclusion of compensation in excess of $100,000 annually applies only to cash compensation, not to non-cash benefits, including:

  • Employer contributions to defined-benefit or defined-contribution retirement plans
  • Payment for the provision of employee benefits consisting of group health care coverage, including insurance premiums
  • Payment of state and local taxes assessed on compensation of employees

Do independent contractors count as employees?
No. Independent contractors can apply for their own PPP loan, and they may not be counted as employees by any other business.

What if I have already laid off employees or cut pay? Can I still use their salary for PPP qualification?
If you have already laid off workers, you have until June 30, 2020 to restore full-time employment and salary levels for any changes made between February 15, 2020 and April 26, 2020. If you fail to do so, any decrease in payroll expenses will be deducted from any loan forgiveness and you will be required to repay that amount.

What do utility expenses include?
Utilities include electricity, gas, water, transportation, telephone, or internet access for which service began before February 15, 2020.

What is the loan term?
PPP loans have a term of two years and may be prepaid at any time with no penalty.

What is the interest rate and fees?
The interest rate for these loans is capped at 1% and there are no loan fees.

Is there a personal or business credit check involved?
No, neither your personal nor business credit report will be pulled.

Is a personal guarantee required?
A personal guarantee is not required on a PPP loan.

Is collateral required?
No, all PPP loans are unsecured and do not require collateral.

How soon do I have to start making payments on a PPP?
PPP loan payments are deferred for six months, meaning no payment is required during that period. However, it is important to note that interest will accrue during that time.

Is forgiven debt taxable?
No, forgiven debt will not be taxable.

What happens if I don’t use PPP funds for authorized purposes?
The SBA will require a signed statement saying you will not use funds for unauthorized purposes. If you use PPP funds for unauthorized purposes, those amounts will not qualify for forgiveness and repayment will be required. If any shareholder, member or partner uses PPP funds for unauthorized purposes, the SBA will have recourse against the shareholder, member or partner for the unauthorized use.

What kind of documentation do I need to validate payroll expenses?
You must submit such documentation such as payroll processor records, payroll tax filings, or Form 1099-MISC, or income and expenses from a sole proprietorship. For borrowers who do not have any such documentation, the borrower must provide other supporting documentation, such as bank records, which accurately demonstrate the qualifying payroll amount.

Can any business obtain a PPP loan?
For the most part, yes. However, you are ineligible for a PPP loan if, for example:

  • You are engaged in any activity that is illegal under federal, state, or local law
  • You are a household employer (individuals who employ household employees such as nannies or housekeepers)
  • An owner of 20 percent or more of the equity of the applicant is incarcerated, on probation, on parole, presently subject to an indictment, criminal information, arraignment, or other means by which formal criminal charges are brought in any jurisdiction, or has been convicted of a felony within the last five years
  • You, or any business owned or controlled by you or any of your owners, has ever obtained a direct or guaranteed loan from SBA or any other Federal agency that is currently delinquent or has defaulted within the last seven years and caused a loss to the government