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CARES Act

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was approved and signed into law. The CARES Act has several key provisions that include the Payment Protection Program (PPP), stimulus payments, changes to Individual Retirement Arrangements (IRAs), new retirement loan minimums and more.

PAYCHECK PROTECTION PROGRAM (PPP)

If your business has fewer than 500 employees, you may be eligible for a loan of up to $10 million to keep your company running.

The CARES Act created a program to help bridge payroll expenses through June 30, 2020. The PPP will be administered by the Small Business Administration (SBA). We will participate in this program and will provide loans to our business customers impacted by the current economic environment to assist with covering costs.

What can I do to prepare to apply?
Borrowers will be required to submit payroll documentation as well as the information outlined below, along with their application. Your application will not be reviewed unless all documentation is provided at the time of submission.

  • Date the business started
  • Business’s mailing address
  • If filed, the 2019 Federal Tax Return. If not, please have complete 2019 financials, including the business’s profit/loss and balance sheet
  • IRS Form 941 — Employer’s Quarterly Federal Income Tax Return for all four quarters for 2019
  • The number of employees paid more than $100,000 per year
  • Calculation of the total payroll for employees paid during the applicable base period, excluding amounts paid above a prorated annual salary of $100,000
  • Other documents that may be required include:
    • Entity documents
    • Certificate of good standing. To obtain a certificate of good standing, please visit the Secretary of State’s website at https://www.sos.state.tx.us/corp/copies.shtml
    • Copy of Borrowing Authority — IRS letter assigning employer identification number, Certificate of Incorporation filed with the state, Articles of Incorporation and By-Laws (or Operating Agreement if LLC), Partnership Agreement and Assumed Name Certificate filed with the state, if applicable

How can I apply?

If you are an existing customer with a business checking account:

  • Gather all of the information and documentation listed in the “What can I do to prepare to apply?” section above.
  • Download and complete the SBA PPP Application form.

    START NOW

  • Once you have gathered all required documentation and completed the SBA PPP Application form, log in to Online Banking and click on “Apply” to the right of the customer account overview page.
  • Follow the application flow and upload the SBA PPP Application form, along with all other required documents, when prompted.

If you have an existing business checking account but do not have access to Online Banking :

  • Gather all of the information and documentation listed in the “What can I do to prepare to apply?” section above.
  • Download and complete the SBA PPP Application form.

    START NOW

  • Once you have gathered all required documentation and completed the SBA PPP Application form, bring the printed form and all required documents to a motor bank near you.

If you are not currently an existing business checking customer, we are unable to accept your application at this time due to the high volume of applications we are receiving.

How much can I borrow?

  • Businesses can borrow up to 2.5 times their average monthly payroll from the previous year. You can include U.S.-based contractors and part-time employees in your calculations. However, for the purposes of this loan, payroll is capped at $100,000 per employee.
  • There is a cap of $10 million dollars per business for this loan.
  • For non-seasonal employers, the average monthly payroll is the average total monthly payments for payroll during the one-year period preceding the date of loan origination.
  • For seasonal employers, the average monthly payroll is the average total monthly payments for the payroll period between February 15, 2019 through June 30, 2019, or March 1, 2019 through June 30, 2019, at the election of the borrower.
  • For businesses that were not in operation during February 15, 2019 to June 30, 2019, the average monthly payroll is the average total monthly payments the payroll period between January 1, 2020 to February 29, 2020.

What can I use the loan for?

  • Employee salaries, wages and commissions
  • Paid leave and severance
  • Group health care benefits during periods of paid, sick, medical or family leave and insurance premiums
  • Retirement benefits
  • State and local payroll taxes
  • Interest on mortgage obligation
  • Rent or leases, under lease agreements in effect before February 15, 2020
  • Utilities, for which service began before February 15, 2020
  • Interest on any debt incurred before February 15, 2020

What are PPP Loan terms?

  • This loan has a maturity of two years and an interest rate of 1% APR
  • Loan payments will be deferred for six months
  • Eligible recipients may qualify for a loan up to $10 million determined by eight weeks of prior average payroll plus an additional 25% of that amount
  • If you maintain your workforce, SBA will forgive the portion of the loan proceeds that are used to cover the first eight weeks of payroll and certain other expenses following loan origination
  • No prepayment penalties
  • No personal guarantee or collateral guarantee required
  • SBA guaranty fee will be waived

Who is eligible for this loan program?

  • This program is available to all businesses, non-profit organizations, veterans’ organizations, tribal business concerns, sole proprietorships, self-employed individuals and independent contractors with fewer than 500 employees.
    • The SBA typically counts anyone on the payroll as one employee, regardless of hours worked or temporary status.
  • There are limited exceptions for businesses larger than 500 employees if they meet applicable SBA employee-based size standards for those industries.
  • Certain businesses in the food or hospitality industry may be eligible if they have more than 500 employees spread out among different locations, provided each location does not have more than 500 employees.

Is there a loan forgiveness provision under the PPP?

  • Some or all of the loan will be forgivable if you use the funds for payroll, including employee salaries, paid sick or medical leave, and insurance premiums.
  • Up to 25 percent of the loan amount may also be forgivable if used to cover other business expenses required to keep your business afloat, including mortgage interest, rent, utility payments and interest on loans incurred prior to February 15, 2020.

When can I apply?

  • Starting April 3, 2020, small businesses and sole proprietorships can apply for and receive loans to cover their payroll and other certain expenses.
  • Starting April 10, 2020, independent contractors and self-employed individuals can apply for and receive loans to cover their payroll and other certain expenses.

What are key dates for this program?

  • February 15, 2020 - your business, mortgage, rental contract or business loan must have been in effect prior to this date.
  • April 3, 2020 - the first date in which small business owners, sole proprietorships and non-profits can apply for this loan.
  • April 10, 2020 - the first date in which independent contractors and self-employed individuals can apply for this loan.
  • June 30, 2020 - the final date to apply for this loan, unless the funds are exhausted prior to this date.

    Frequently Asked Questions

    • Can I use my 2018 tax return?
      No, please use a 2019 Federal Tax Return if filed, or your complete 2019 financials, including the business’s profit/loss and balance sheet.
    • Where do I get a Certificate of Good Standing?
      To obtain a Certificate of Good Standing, please visit the Secretary of State’s website at https://www.sos.state.tx.us/corp/copies.shtml
    • Will I need an IRS Form 941?
      Yes, if you are required to submit an IRS Form 941 then you will need to provide this to us.
    • If I cannot provide my 2019 taxes nor a profit/loss sheet, can I still submit my application?
      No, all required documents must be submitted in order for us to make a decision on your loan.
    • What is the turnaround time for a decision on my loan application?
      We have received a large number of applications and at this time are unable to provide a timeline. We are working as fast as we can to provide a decision to all applicants as soon as possible.
    • If I have multiple businesses, do I need to complete a separate application for each?
      Yes, you will need to submit a separate application for each business.
    • Is a spreadsheet with 2019 revenues acceptable?
      No, please provide payroll data.
    • Will Frost run a credit report for this loan application?
      No, we will not run a personal credit report for this loan.
    • Is Frost reviewing loan applications on a first come, first served basis?
      As soon as we receive your application and all required documents, we will begin the review process.

    Important Information
    Due to the amount of information required to process these loans, we will only be able to offer PPP loans to existing business checking customers with accounts open as of April 1, 2020. If you are not an existing business checking customer, we advise you to contact your current financial institution for assistance.

    Call your banker for more information.

    STIMULUS PAYMENTS

    Most stimulus payments will be direct deposited with no additional action required by you, depending on how you previously filed your taxes.

    • If you used a bank account for direct payments to, or to receive refunds from, the IRS your direct deposit could be received as early as April 22, 2020.
    • If you do not have a bank account on file with the IRS, your stimulus check will be sent in the mail to their most recent address on file. And that’s likely to take a little longer.


    IMPACT TO YOUR INDIVIDUAL RETIREMENT ARRANGEMENT (IRA)
    • For the tax year 2020, Required Minimum Distributions (RMDs) have been waived
      • If you have already taken your RMDs for 2020, you will need to include it with your gross income and pay taxes on it
    • You may withdraw from your IRA penalty free, even if you are under the age of 59 ½
    • The deadline for making a 2019 contribution to your IRA has been extended to July 15, 2020
    • The 10 percent IRS penalty for taking early distributions from qualified retirement plans, including IRAs and 401(k)s, has been waived
      • This waiver applies to distributions taken between January 1, 2020 and December 31, 2020 and up to $100,000 of distributions can avoid the penalty
    • The mandatory 20 percent income tax withholding for rollover distributions has been waived.
      • Income taxes on a coronavirus-related distribution can be paid over a three-year period and you also have up to three years to recontribute the amount to a plan or IRA

    How to Qualify
    To qualify for these IRA withdrawal changes, a distribution must be coronavirus-related. That means that you, a spouse or a dependent must have been diagnosed with COVID-19. You may also qualify if you experienced adverse financial consequences as a result of being quarantined, furloughed, laid off or received reduced work hours due to COVID-19.

    NEW RETIREMENT LOAN MAXIMUM

    With the enactment of the CARES Act, the maximum loan amount for a retirement plan loan has been doubled to the lower of $100,000 or 100 percent of the vested account balance. This applies to loans secured between March 27, 2020 and December 31, 2020. The due date for the repayment of these loans has also been delayed by a year.

    How to Qualify
    To qualify for these retirement plan changes, the cause for a loan must be coronavirus-related. That means that you, a spouse or a dependent must have been diagnosed with COVID-19. You may also qualify if you experienced adverse financial consequences as a result of being quarantined, furloughed, laid off or received reduced work hours due to COVID-19.