Frequently Asked Questions:
SBA Paycheck Protection Program (PPP)

The Paycheck Protection Program (PPP) of the U.S. Small Business Administration is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. Funds can be used for payroll costs, mortgage interest, rent, and utilities. Loans may be forgiven if certain criteria are met.

Question: When can applicants apply for a PPP loan?

Qualified borrowers should talk to an SBA-approved lender as soon as possible, given that there are limited program funds available. At this time, the program's earliest acceptance dates are:

Question: Who can apply for a PPP loan?

All small businesses with fewer than 500 employees, including:

Businesses with more than 500 employees are eligible in certain industries:

Question: What can the loan be used for?

Loan proceeds must be used for:

Due to anticipated high subscription, not more than 25% of the loan proceeds may be used for non-payroll costs.

Question: What counts as payroll costs?

Payroll costs include:

Question: How much can be borrowed?

Eligible applicants can borrow 2.5 times the business's average monthly payroll up to $10 million. Payroll costs are capped at $100,000 on an annualized basis for each employee.

We encourage you to consult with your dedicated relationship manager or accountant for more information.

Question: How much of the loan will be forgiven?

Full loan amounts will be forgiven as long as:

Loan forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Borrowers will owe money when the loan is due if full-time headcount declines, or if salaries and wages decrease by more than 25% for any employee that made less than $100,000 annualized in 2019.

Question: What is my interest rate?

1% fixed rate.

Questions: When do I need to start paying interest on my loan?

You do not have to make any payments for six months following the date of disbursement of the loan. However, interest will continue to accrue on PPP loans during this six-month deferment.

Question: When is my loan due?

In 2 years. The loan can be paid earlier with no prepayment penalties or fees.

Question: Do I need to pledge any collateral for this loan?

No, no collateral is required.

Question: Do I need to personally guarantee this loan?

No, there is no personal guarantee requirement. However, if the proceeds are used for fraudulent purposes, the U.S. government will pursue criminal charges against you.

Question: What information do I need to apply for this loan?



We recommend your accountant review these definitions in preparing payroll records for loan submission. The Act also requires documentation for loan forgiveness.

Question: Do independent contractors count as employees for purposes of PPP loan calculations?

No, independent contractors have the ability to apply for a PPP loan on their own so they do not count for purposes of a borrower's PPP loan calculation.

Disclaimer: Pacific City Bank is updating this information to the best of its abilities, but you should always rely on and the U.S. Treasury Department to serve as the most up-to-date resources for SBA Lending and the Paycheck Protection Program. The FAQ information contained herein was good as of 4/13/2020.