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Dinse Brief – Paycheck Protection Program

Pursuant to the CARES Act, the U.S. Treasury Department (“Treasury”) announced the rules and procedures for small businesses that are seeking assistance in dealing with the economic consequences of the COVID-19 pandemic.  The Paycheck Protection Program (“PPP”) makes up to $349 billion in forgivable loans available to small businesses.  PPP funds can be used for payroll costs (including benefits), and payments for utilities, rent, interest on mortgages (provided such services and agreements were in place prior to February 15, 2020).

A. Key Information

  • Small businesses with fewer than 500 employees are eligible (including non-profit organizations).
  • Applications may be made by small businesses and sole proprietorships starting Friday, April 3.
  • Applications may be made by independent contractors and self-employed individuals starting Friday, April 10.
  • No collateral or personal guarantees are required.
  • All loan terms will be the same for every business that applies.
  • Loan forgiveness is based on maintaining or quickly rehiring employees and maintaining salary levels.
  • The loan amount can be for up to 2 months of your average monthly payroll costs from 2019 plus an additional 25% of that amount (subject to a $10 million cap).
  • Receipt of a PPP loan will make your business ineligible to receive tax relief under certain sections of the CARES Act (the Employee Retention Payroll Tax Credit and/or the Delay of Payment of Employee Payroll Taxes).
  • Although applications will be accepted until June 30, 2020, Treasury is encouraging businesses to apply as quickly as possible because there is a funding cap.
  • Applications can be made through any existing SBA lender—which might include the Vermont financial institution with which you already have a relationship. Vermont SBA lenders include the following (for the full list, go here):
Citizens BankCommunity Bank (formerly Merchants Bank)
Community National BankKey Bank
Mascoma Savings BankNorthfield Savings Bank
Passumpsic Savings BankPeoples United Bank
TD BankUnion Bank
Vermont Federal Credit UnionVermont State Employees Credit Union


B. Action Items / Documents to Gather

We recommend that you prepare for the Application by taking the following steps and gathering the following documents:

Calculating “Average Monthly Payroll.”  This is the most critical part of the Application, as it will determine the size of your loan.  To do so, we recommend assembling the following documents so you can review them with your lender and calculate the loan amount.

Employment Information from 2019

  • Contact your payroll provider to obtain:
    • An employer copy of all Form W-2s provided to employees in 2019.
    • Prepare a list of current employees that includes hire and termination dates as applicable.

Payroll Tax Forms from 2019

  • Contact your payroll provider to obtain:
    • Each IRS Form 941 that was filed in each quarter for 2019. (So you should receive FOUR Forms.)
    • The Company’s IRS Form 940 (which reports the Company’s annual Federal Unemployment Tax (FUTA) payment) that was prepared for 2019.

NOTE that the amount of Average Monthly Payroll must exclude any payments made to employees on an annualized basis that are over $100,000.  In other words, if an employee has an annual salary of $120,000, $20,000 of that cost will be excluded from the calculation of Average Monthly Payroll.

Other Tax Documents.  We also suggest assembling the following information.

  • IRS Form 1120 or 1099 (your general tax return) from past 3 years (if available).
  • Affiliated Entities. Do you or your major shareholders manage or own another business entity? If so, gather tax returns from the past 3 years for the Affiliated Entity as well.

20% Owners.  If your business has an owner that holds more than 20% of the equity of the business, each such owner will likely need to provide additional personal information in the Application.

  • Normally, SBA Form 1919 is the form used in such circumstances. It will likely be modified for purposes of the PPP.  But if you fill this out, you should have the information you need to complete any modification.

Preparing a Narrative.  Be prepared to answer the following questions from your lender:

  • How has the Coronavirus affected your business?
  • How are you going to use the loan proceeds? [NOTE that they are intended for payroll, utilities, and rent, and interest payments on mortgages.]
  • What is your plan to maintain your current workforce?
  1. Useful Web Links

Please see these web links for additional information and the Application:

For more information related to the PPP, please contact Brian Murphy (, Dave Gurtman (, Afi Ahmadi (, Jeff McMahan ( or Ted Lawrence (