Paycheck Protection Program Loans

Picture of Rodney D. Wade, CFP®, AIF®, EA, MST
Rodney D. Wade, CFP®, AIF®, EA, MST
paycheck protection program loans

On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The CARES Act contains many provisions for businesses and individuals, but the most impactful provision for small businesses in the immediate term is the Paycheck Protection Program loan.

The Paycheck Protection Program loan will provide up to $349 billion of federally guaranteed loans for small businesses. The loans are being issued by qualified SBA lenders (banks) and will be available until June 30, 2020, or until funds run out.

What You Need to Know About the Paycheck Protection Program

Businesses with 500 or fewer employees, which were operational on February 15, 2020, are generally eligible for 2½ times the business’s average monthly payroll over either the prior 12 months or for 2019 (up to a maximum loan of $10 million). Some of the loans may be forgiven, and for the remaining debt, the interest rate will only be 1%.

The Paycheck Protection Program loans can be used for the following expenses:

  • Payroll costs (up to $100,000 per employee);
  • Group health coverage;
  • Business occupancy costs (mortgage interest, rent, and utilities); and
  • Interest on other business loan obligations.

How Does the Paycheck Protection Program Work? 

The loans may be forgiven for amounts used for these expenses for up to eight weeks from the loan origination date. However, loan forgiveness will be reduced by reductions in employee compensation, or layoffs of employees during the period of February 15, 2020, through June 30, 2020.

Any loan amount that isn’t forgiven has a term of 2 years, and an interest rate of 1%. No payments will be required for the first six months, though interest will continue to accrue during that time.

We suggest that you reach out to your existing banking institution to determine whether they are a participating lender. If your existing bank does not participate in Paycheck Protection Program loans check the SBA Lender search.

What Documents Do You Need to Apply for the Paycheck Protection Program? 

We also suggest that you begin gathering the following documentation that we expect will be required for the application process:

  • Payroll records, including copies of payroll tax returns and W-2s going back to the first quarter of 2019 — including documentation of full-time versus part-time employees;
  • Documentation of qualifying expenses (rent/lease contracts, mortgage statements, utility bills, loan documents for other loan obligations, and group health insurance information);
  • Three years of business tax returns; and
  • 2019 year-end income statement and balance sheet.

Can My Business Apply for the Paycheck Protection Program and the Employee Retention Credit? 

As a final note, businesses receiving Paycheck Protection Program loans are ineligible for the Employee Retention Credit, which is a new credit available to small businesses under the CARES Act. We would be happy to consult with you to compare Paycheck Protection Program loans and the Employee Retention Credit.

Protect Your Wealth with Wade Financial Advisory

We welcome the opportunity to answer any questions you may have. Contact us to learn more about how WFA can partner with you to grow and protect your wealth.

This communication contains the opinions of Wade Financial Advisory, Inc. about the securities, investments and/or economic subjects discussed as of the date set forth herein. This communication is intended for information purposes only and does not recommend or solicit the purchase or sale of specific securities or investment services. Readers should not infer or assume that any securities, sectors or markets described were or will be profitable or are appropriate to meet the objectives, situation or needs of a particular individual or family, as the implementation of any financial strategy should only be made after consultation with your attorney, tax advisor and investment advisor. All material presented is compiled from sources believed to be reliable, but accuracy or completeness cannot be guaranteed. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. INVESTMENTS BEAR RISK INCLUDING THE POSSIBLE LOSS OF INVESTED PRINCIPAL.

Wade Financial Advisory, Inc. is an investment adviser registered with the Securities and Exchange Commission. Registration of an Investment Advisor does not imply any level of skill or training. A copy of current Form ADV Part 2A is available upon request or at Please contact Wade Financial Advisory, Inc. at (408) 369-7399 with any questions.

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