Skip to main content
Banner Background

Paycheck Protection Program 

SBA Paycheck Protection Program (PPP)

As a participating lender under the SBA 7(a) program, Cathay Bank is committed to helping you navigate your options in obtaining access to capital during the COVID-19 crisis.

The Small Business Administration (SBA) announced on April 24, 2020, that it had received a second round of funding allocated for the Paycheck Protection Program (PPP) and would resume accepting applications on April 27, 2020.

In anticipation of this expansion of the PPP, Cathay Bank has continuously been processing applications received during the first round of funding. We are now working diligently to submit those processed applications and secure funding for those who have applied. Please note that we are no longer accepting applications due to the high volume of applications already received.

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act. This law includes assistance to small businesses to be provided through the Paycheck Protection Program. This program is administered by the SBA.

Below are some important details you should be aware of about the PPP program. View the Paycheck Protection Plan FAQs below based on information available as of May 1, 2020. Other eligibility requirements may apply.

  • The Payment Protection Plan loan will be generally available to companies with 500 employees or less, individuals who operate under a sole proprietorship, 501 (c)(3) nonprofit organizations, 501 (c)(19) veteran’s organizations, and some Tribal business concerns.
  • Eligibility will be expanded under the SBA 7(a) program to help businesses cover costs related to payroll (including healthcare related costs), rent, mortgage interest, interest on existing debt and utility payments.
  • You must confirm that your business needs the financial relief because it was impacted by COVID-19 events.
  • Loan will not require collateral or any personal guaranties.
  • Generally, the loan amount will be based on 2.5 times your average monthly payroll costs.
  • The interest rate will be 1.00% with a term of two years.
  • You will not have to make payments on the loan for at least six months. However, interest will continue to accrue during this period.
  • Loan proceeds used for a “qualified purpose” based on SBA guidelines can be considered for loan forgiveness. Additional documentation will be required in order to qualify for loan forgiveness. Please understand any portion that is not forgiven by the SBA will have to be repaid.

Small business owners should be aware that the CARES Act provides other forms of monetary assistance other than the PPP, including Economic Injury Disaster Loans, for which applications may be submitted now directly through the SBA at www.SBA.gov/disaster.

 

 


The information provided is accurate as of May 1, 2020, and subject to change.

Frequently Asked Questions

1. Is the Paycheck Protection Program (PPP) no longer available?

The SBA announced on April 24, 2020, that it had received a second round of funding allocated for the Paycheck Protection Program (PPP) and would resume accepting applications on April 27, 2020.

As of May 1, 2020

2. Is Cathay Bank accepting new PPP applications?

Cathay Bank will not be accepting new PPP applications. However, all applications currently in queue submitted within the initial PPP application submission period will continue to be considered for processing with the assumption that additional funding will be allocated. Please note there is no guarantee that additional funds will be appropriated for the PPP program by Congress or that any funds will be allocated for the existing PPP applications currently in queue.

As of April 16, 2020

3. How do I check the status of my PPP application?

Your application is now being reviewed by your relationship banker. If you have not been contacted with an update on your application, please feel free to contact your lender or branch contact for additional information.

As of April 16, 2020

4. If Cathay Bank approved my PPP loan, is funding guaranteed for my loan?

In order to secure the PPP loan funds for your application, in addition to Cathay Bank’s approval, you must also have an assigned “SBA Loan Number” issued by U.S. Small Business Administration through their E-tran system for your loan file. The assigned loan officer will contact you if funds for your loan application have been secured.

As of April 16, 2020

5. If Congress increases funding for the PPP loan program, is funding guaranteed for my loan?

Unfortunately, with the significant volume of applications already submitted to Cathay Bank and other lenders, it is likely that not every qualified applicant will receive loan proceeds under the Paycheck Protection Program even with additional funding. Submission of a completed application package does not automatically guarantee processing or approval from the lender and U.S. Small Business Administration.

As of April 16, 2020

6. Can I withdraw my PPP application?

Yes, you may withdraw your PPP application anytime. Please contact your relationship banker to withdraw your PPP application.

As of April 16, 2020

7. What is the Paycheck Protection Program (PPP)?

The Paycheck Protection Program (“PPP”) authorizes up to $349 billion in forgivable loans to small businesses to pay their employees during the COVID-19 crisis. All loan terms will be the same for everyone. Eligible use of proceeds includes the following:

  • Payroll costs, including benefits
  • Mortgage interest obligations for business related debt, incurred before February 15, 2020
  • Rent, under lease agreements in force before February 15, 2020
  • Utilities related to business operations, for which service began before February 15, 2020

As of April 7, 2020

8. Is this loan considered “free money”?

No. The Paycheck Protection Program was initiated primarily to ensure that employees in the U.S. are paid due to wage interruptions caused by the COVID-19 pandemic. Please be advised that any portion of the loan that is not forgiven will be payable and due based on loan terms set forth by the program. Applicants should utilize this program responsibly while taking into consideration that debt forgiveness is not guaranteed approval and subject to extensive eligibility requirements & documentation after the loan is funded. Submission of a completed application package does not automatically guarantee processing or approval from the lender and U.S. Small Business Administration. Applicants should also take into consideration their ability to repay all or a portion of this loan.

As of April 7, 2020

9. Who can apply?

All businesses – including nonprofits, veterans’ organizations, Tribal business concerns, sole proprietorships, self-employed individuals, and independent contractors – with 500 or fewer employees can apply. Businesses in certain industries can have more than 500 employees if they meet the applicable SBA employee-based size standards for those industries.

As of April 7, 2020

10. How long will this program last?

The program is available until June 30, 2020. Your completed application package will be processed in the order it was received. Please note that submission of a completed application package does not guaranty approval from the U.S. Small Business Administration.

As of April 16, 2020

11. How many loans can I take out under this program?

Only one.

As of April 7, 2020

12. What can I use these loans for?

  • Payroll costs, including benefits
  • Mortgage interest obligations for business related debt, incurred before February 15, 2020
  • Rent, under lease agreements in force before February 15, 2020
  • Utilities related to business operations, for which service began before February 15, 2020

As of April 7, 2020

13. What counts as payroll costs?

Payroll costs include:

  • Salary, wages, commissions, or tips (capped at $100,000 on an annualized basis for each employee);
  • Employee benefits including costs for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal; payments required for the provisions of group health care benefits including insurance premiums; and payment of any retirement benefit;
  • State and local taxes assessed on compensation; and
  • For a sole proprietor or independent contractor: wages, commissions, income, or net earnings from self-employment, capped at $100,000 on an annualized basis for each employee.

As of April 7, 2020

14. How large can my loan be?

The lesser of $10,000,000 or 2.5 times your average monthly payroll costs for the past year. Please refer to the calculation worksheet provided separately.

As of April 7, 2020

15. Will my loan be automatically forgiven?

No. You will need to request and submit supporting documentation 8-weeks after loan closing for the lender to determine debt forgiveness eligibility. The request will include documents that verify the number of full-time equivalent employees and pay rates, as well as the payments on eligible business mortgage, lease, and utility obligations. Qualified expenses must be spent during this 8-week period. You must certify that the documents are true and that you used the forgiveness amount to keep employees and make eligible mortgage interest, rent, and utility payments. Applicants should utilize the program responsibly while taking into consideration that debt forgiveness is not guaranteed approval and subject to extensive eligibility requirements/documentation after the loan is funded.

As of April 7, 2020

16. What is my interest rate?

1.00% fixed.

As of April 7, 2020

17. How is my loan payment calculated?

Payments for the first 6-months will be deferred; interest will continue to accrue during the deferment period. Any portion that is not forgiven by SBA will have to be repaid during the 2-year loan term with principal and interest due monthly starting with month 7.

As of April 7, 2020

18. Can I pay my loan earlier than 2 years?

Yes. There are no prepayment penalties or fees.

As of April 7, 2020

19. Do I need to pledge any collateral for these loans?

No. Collateral will not be required for this loan.

As of April 7, 2020

20. Do I need to personally guarantee this loan?

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

As of April 7, 2020

21. How will I receive the loan funds?

The approved loan amount will be directly deposited into a new Cathay Bank business checking account which you will be required to open specifically to track the PPP use of proceeds.

As of April 7, 2020

22. Can I apply for this loan if I already applied for the SBA Economic Injury Disaster Loan?

Yes. However, you cannot apply for the Paycheck Protection Loan for the same use of proceeds requested in the SBA Economic Injury Disaster Loan. For example, you cannot receive an SBA Economic Injury Disaster loan and Paycheck Protection Program loan for payroll expenses; however, you could get a loan for working capital through the SBA Economic Injury Disaster loan and apply for payroll related assistance through the Paycheck Protection Program.

As of April 7, 2020

23. Can I apply for this loan if I am a landlord of an investment property generating rental income from tenants?

No. However, you are eligible to apply for relief assistance through the SBA Economic Injury Disaster loan program.

As of April 7, 2020

24. I heard I can get a $10,000 advance from U.S. Small Business Administration. Can I apply to the lender directly for this?

No. In order to apply for the $10,000 advance, you must apply for the SBA Economic Injury Disaster loan program directly through the U.S. SBA’s website at www.sba.gov/disaster.

As of April 7, 2020

Cathay Bank

Email communication is not secure

Please do not include sensitive information such as account numbers or other personal information such as Social Security or Tax Identification numbers, driver’s license numbers, etc. in any email sent to us via this link.

Have a Question?

Please contact our SBA Department for all your SBA Loan needs at 866-228-4296 or speak with your local Cathay Bank branch manager.