The Paycheck Protection Program (PPP) expired on August 8. This was an ongoing FAQ for questions about applying for the PPP for small businesses and individual artists, with a focus on freelancers and contractors. Please note this information is now out-of-date, but we'll update these pages with information about new benefits programs as they become available.
As with Springboard's primary coronavirus page, this is an evolving list of resources for information, exchange, and support in this time. Accuracy at any given point cannot be guaranteed as this is a fast-moving and evolving situation. If you have updates or resources to add, please send them to email@example.com.
Please consult a lawyer, accountant or other professional before making any decisions! The information on this page is not intended or implied to be a substitute for professional advice. To find a lawyer, please see our primary MnLA page.
Thanks to Garrett Prehatney from the University of Minnesota Law School for his assistance in compiling these resources.
Last updated July 13, 2020
What is a PPP Loan?
PPP is a forgivable loan program that helps small businesses keep their workforce employed during the Coronavirus (COVID-19) crisis. The loan is intended to cover expenses incurred during the period from February 15, 2020 through June 30, 2020. In July, an update extended the date to replace full-time equivalent employees and restore salaries from June 30, 2020 until December 31, 2020.
I thought this expired. Are these funds still available? Was it extended?
The program expired on August 8. Please see this page for ongoing resources for creative small businesses and freelancers.
Who is eligible for the loan?
You are eligible for a loan if you are a small business that employs 500 employees or fewer, or if your business is in an industry that has an employee-based size standard through SBA that is higher than 500 employees. This also includes tribal businesses and 501(c)(19) veteran organizations.
What about nonprofits?
Yes, nonprofits are eligible. 501(c)(3) nonprofits, including religious organizations, will be eligible for the program. Nonprofit organizations are subject to SBA’s affiliation standards.
I’m a “small business,” but it’s just me as a sole proprietor, and I don’t have any employees. As an independent contractor or gig economy worker, am I eligible?
Yes. Sole proprietors, independent contractors, gig economy workers, and self-employed individuals are all eligible for the Paycheck Protection Program.
I looked at PPP early on in the pandemic and thought it wasn't a good fit for me. Besides the extension, what other changes have there been?
On June 5, the US government enacted changes to the Paycheck Protection Program called the PPP Loan Flexibility Act (PPPFA), which make it easier for businesses to qualify for loan forgiveness on a larger portion of their loans. This legislation came about after some concerns from small businesses about the complexity of the PPP process.
PPFA extends the “covered period” from 8 weeks to 24 works from the date of the origination of the covered loan, or December 31, 2020 (whichever is earlier). A borrower may also elect keep the original 8-week covered period.
PPFA lowers the amount of the PPP loan required to be spent on payroll costs from 75% to 60%
All changes signed into law on June 5, 2020 are retroactively applicable as if they were included in the original CARES Act, except for the change in loan term (maturity date), which is prospective
How to apply
Where can I apply for the Paycheck Protection Program?
You can apply for the Paycheck Protection Program (PPP) at any lending institution that is approved to participate in the program. This could be the bank you already use, or a nearby bank. Most have an online application.
What if I don’t have a bank?
You don't need to have a regular bank to apply for PPP. There are thousands of banks that already participate in the SBA’s lending programs, including numerous community banks, possibly in your community. It doesn't even need to be your regular bank or lender, even if you do have one. You don’t have to visit any government institution to apply for the program. You can call your bank or find SBA-approved lenders in your area through SBA’s online Lender Match tool. In Minnesota, you can also call your these Small Business Development Center or WomenVenture and they can provide free assistance and guide you to lenders.
There are also nonprofits, organizations and online providers, including services like PayPal or BlueVine, that can handle PPP loans. Twin Cities LISC is approved for businesses and organizations in North Minneapolis, on Lake Street in south Minneapolis and the Frogtown/Rondo and East Side neighborhoods in St. Paul. Priority for these is with BIPOC-owned businesses.
I’m ready to apply. What do I need to have ready?
If you’re a Sole Proprietor, Independent Contractor or Self-Employed Individual, you need these items proving your income for 2019:
+ Form 1040 Schedule C for Sole Proprietors and Independent Contractors. This is the form where you list your income and expenses for your business. Regardless of whether you have filed a 2019 IRS tax return, you must provide the 2019 Form 1040 Schedule C with your PPP loan.
+ 1099 forms.
+ Payroll Processing records and Payroll tax filings (if relevant).
+ Bank records, if the above are unavailable. This can be screenshots or PDFs of account statements.
+ Routing and bank account information, for direct deposit.
What is the maximum amount I can borrow?
The amount any small business is eligible to borrow is 250 percent of their average monthly payroll expenses, up to a total of $10 million. This amount is intended to cover 8 weeks of payroll expenses and any additional amounts for making payments towards debt obligations. This 8 week period may be applied to any time frame between February 15, 2020 and December 31, 2020. Seasonal business expenses will be measured using a 12-week period beginning February 15, 2019, or March 1, 2019, whichever the seasonal employer chooses.
Is it for me?
What if I am really reluctant to take out a loan? I don’t want to get trapped making payments if the economy is still in shambles in a few months or a year.
If you make sure to meet the requirements for loan forgiveness, then you would not need to make any payments as the loan would be forgiven. If you are required to repay any of the funds, payments will be deferred for at least 6 months. Ultimately, you are the only one that can decide if this program is right for your business.
Is this a loan? It sounds like a grant.
With a grant, the money is given with no strings attached. With the PPP loan, there are requirements that need to be met in order for the loan to be forgiven. There is also a separate loan forgiveness application that needs to be filed. If the conditions for forgiveness are not met, then the loan does need to be repaid.
Uses for PPP
How can I use the money so that the loan will be forgiven?
The amount of principal that may be forgiven is equal to the sum of expenses for payroll, and existing interest payments on mortgages, rent payments, leases, and utility service agreements. Payroll costs include employee salaries (up to an annual rate of pay of $100,000), hourly wages and cash tips, paid sick or medical leave, and group health insurance premiums.
What parts won’t be forgiven?
If you would like to use the Paycheck Protection Program for other business-related expenses, like inventory, you can, but that portion of the loan will not be forgiven. To receive full loan forgiveness, a borrower must use at least 60 percent of the PPP loan for payroll costs, and not more than 40 percent of the loan forgiveness amount may be attributable to non-payroll costs.
It’s just me, and I don’t have payroll. What can I use it for?
You may use it for what is called "owner compensation replacement." Basically, this is your 2019 net profit (line 31 on your Schedule C) divided by 12, which gets you a monthly “average” net profit. This number times 2.5 equals your PPP loan amount, which is to say your PPP loan is roughly ten weeks worth of net profit. (Again, net profit and not gross profit before losses and deductions.)
This can also cover:
+ Mortgage interest payments on any business mortgage obligation on real or personal property that was incurred before February 15, 2020
+ Payments on business rent obligations on real or personal property under a lease agreement in force before February 15, 2020
+ Business utility payments for the distribution of electricity, gas, water, transportation, telephone, or internet access for which service began before February 15, 2020.
I show a gross profit on my Schedule C, but have a net profit of zero, or a negative net profit.
Unfortunately, you will not be eligible for PPP. If you are a freelancer where you've lost the majority of your income through a full- or part-time job where you received a W-2, or if the majority of your income is freelance or contract work that has ended or slowed down, you may wish to apply for unemployment insurance benefits.
Timeline and forgiveness
When is the loan forgiven?
The loan is forgiven at the end of the 8-week or 24-week period after you take out the loan. Borrowers will work with lenders to verify covered expenses and the proper amount of forgiveness. If you submit to your lender a loan forgiveness application within 10 months after the end of your loan forgiveness covered period, you will not have to make any payments of principal or interest on your loan before the date on which SBA remits the loan forgiveness amount on your loan to your lender (or notifies your lender that no loan forgiveness is allowed).
How do I apply for loan forgiveness?
As of July, there is now Form 3508EZ to fill out.
What is the covered period of the loan?
The ‘‘loan forgiveness covered period’’ is the 24-week period beginning on the date your PPP loan is disbursed; however, if your PPP loan was made before June 5, 2020, you may elect to have your loan forgiveness covered period be the eight-week period beginning on the date your PPP loan was disbursed. The covered period during which expenses can be forgiven extends from February 15, 2020 to June 30, 2020. Borrowers can choose which 8 weeks they want to count towards the covered period, which can start as early as February 15, 2020.
How much of my loan will be forgiven?
The purpose of the Paycheck Protection Program is to help you retain your employees, at their current base pay. If you keep all of your employees, the entirety of the loan will be forgiven. If you still lay off employees, the forgiveness will be reduced by the percent decrease in the number of employees. If your total payroll expenses on workers making less than $100,000 annually decreases by more than 25 percent, loan forgiveness will be reduced by the same amount. If you have already laid off some employees, you can still be forgiven for the full amount of your payroll cost if you rehire your employees by December 31, 2020.
Am I responsible for interest on the forgiven loan amount?
No, if the full principal of the PPP loan is forgiven, the borrower is not responsible for the interest accrued in the 8-week or 24-week covered period. The remainder of the loan that is not forgiven will operate according to the loan terms agreed upon by you and the lender.
What are the interest rates and terms for the loan amount that is not forgiven?
The terms of the loan not forgiven depend on when the loan is issued. Loans issued prior to June 5 have a maturity of 2 years. Loans issued after June 5 have a maturity of 5 years. All loans have an interest rate of 1%, though this may differ on a case-by-case basis. However, the maximum terms of the loan feature a 10-year term with interest capped at 4 percent and a 100 percent loan guarantee by the SBA. You will not have to pay any fees on the loan, and collateral requirements and personal guarantees are waived. Loan payments will be deferred for at least six months and up to one year starting at the origination of the loan.
Other loans and relief payments
I took out a bridge loan through my state, am I eligible to apply for the Paycheck Protection Program?
Yes, you can take out a state bridge loan and are still eligible for the PPP loan.
If I have applied for, or received an Economic Injury Disaster Loan (EIDL) related to COVID-19 before the Paycheck Protection Program became available. Will I be able to refinance into a PPP loan?
Yes. If you received an EIDL loan related to COVID-19 between January 31, 2020 and the date at which the PPP becomes available, you would be able to refinance the EIDL into the PPP for loan forgiveness purposes. However, you may not take out an EIDL and a PPP for the same purposes. Remaining portions of the EIDL, for purposes other than those laid out in loan forgiveness terms for a PPP loan, would remain a loan. If you took advantage of an emergency EIDL grant award of up to $10,000, that amount would be subtracted from the amount forgiven under PPP.
I’m on Unemployment Insurance benefits. Will that affect my benefits?
Yes, your PPP funds for payroll will affect your unemployment benefits. Once the PPP funds are exhausted you may then be eligible to reapply for unemployment. You can also be strategic: since you can choose the weeks you'd like to use the fund, you may wish to activate your PPP funds after the weekly $600 Pandemic Unemployment Assistance (PUA) benefits expire after July.
For additional information, please visit the SBA PPP webpage:
We have set up a fundraiser to expand the Personal Emergency Relief Fund, so that we can continue to support artists, contractors, and freelancers in Minnesota who have lost income due to Coronavirus/COVID-19. Please click below to give online, or send a check to:
Springboard for the Arts
Attn: Individual Giving
262 University Avenue West
Saint Paul, MN 55103
If you have any questions about individual giving, please contact Katie Hae Leo, Development Director, at katiehl@springboardforthearts, or 651-292-4381.