Paycheck Protection Program Opens April 3rd

LOAN PROGRAM TO HELP BUSINESSES UNDER CARES ACT WILL NOW BE AVAILABLE.

CARES ACT LOAN PROGRAM WITH FORGIVENESS OPPORTUNITY FOR SMALL BUSINESSES

The CARES Act included a $349 billion program for small businesses with 500 or fewer employees including not-for-profits, veterans’ organizations, tribal concerns, self-employed individuals, sole proprietorships, and independent contractors to become eligible for loans to pay up to eight weeks of payroll costs, including benefits as well as other costs.

The draw of the Paycheck Protection Program (PPP) is that it includes loan forgiveness for employer’s maintaining or quickly rehiring employees and maintaining salary levels. There are conditions and financial tracking to ensure the funds were used for intended purposes, and can be reduced under certain conditions. Basically, forgiveness will be reduced if full-time headcount declines or if salaries and wages decrease during the 8-week measurement period after the loan origination.

The amount of the loan is based on your salary levels prior to the pandemic and is then used to measure the amount of the loan forgiveness under the program during the measurement period after the loan origination.

PPP funds can also be used to pay interest on mortgages, rent, and utilities but at least 75%of the forgiven loan amount must have been used for payroll. Any amount that is not forgiven under the program retains a loan status and loan payments will be deferred for six months. No collateral or personal guarantees are required, and there are no fees that should be charged for the program.

The program requires eligible businesses to work with participating lenders and opens on April 3rd for small businesses and sole proprietorships affected by the coronavirus pandemic, while independent contractors and self-employed individuals can apply starting April 10th.

Participants under the PPP are not eligible to also claim an employee retention credit under the CARES act. This credit gives eligible employers whose business operations are fully or partially suspended due to the COVID-19 pandemic a credit against employment taxes equal to 50% of qualified wages (up to $10,000 in wages) for each employee.

The CARES act and other recent legislation has resulted in a lot of benefits for small businesses, so be sure to explore your options under the various programs that are now available.