Paycheck Protection Program (PPP)
As we previously indicated, the Small Business Administration (SBA) has been working to pull together the details of the PPP which was established pursuant to the Coronavirus Aid, Relief, and Economic Security (CARES) Act on Friday. The PPP was developed to provide small businesses with funds to pay up to 8 weeks of payroll costs including benefits. Funds can also be used to pay interest on mortgages, rent, and utilities. Late yesterday evening, banks began to receive guidance from the SBA detailing how the program will be administered. A few key points were referenced:
- Applicants may be eligible for loan amounts up to 2.5 times the average monthly payroll (some independent contractor payments may be factored into the calculation).
- If at least 75% of the loan amount was used to cover payroll and employee levels are maintained, the eligible loan amount may be forgiven.
- Loans that are not forgiven are to be repaid in 2 years and will carry a 0.5% interest rate
- Loan payments may be deferred for 6 months. However, interest will continue to accrue.
- Applications will be processed through banks
The links below were provided by the SBA and will help to prepare for the application process, which is expected to officially open on Friday, April 3 .
- Overview of the Payment Protection Program (PPP)
- Paycheck Protection Program Information Sheet (for Borrowers)
- Payment Protection Program Application Form
Below are some items that will likely be requested to assess program eligibility:
- 2019 Payroll — including the last 12 months of payroll
- 2019 Employees — 1099’s for select independent contractors (Note: Do NOT include 1099’s for services.)
- Healthcare costs — all health insurance premiums paid by the business owner under a group health plan
- Retirement — your company retirement plan funding paid for by the company
Please contact your banker to determine if they are offering these loans and to request a preliminary listing of required documents.
We will continue to update you as things evolve.Please note, these laws and related policies will continue to evolve in the coming weeks and are subject to change/clarification. Therefore, information contained within this communication is provided for informational purposes only and is not intended to substitute for obtaining accounting, tax, or financial advice from a professional accountant. Presentation of the information via the internet is not intended to create, and receipt does not constitute, an accountant-client relationship. ATS CPA & Consulting Services, Inc. specifically disclaims any liability for any direct, indirect, incidental, consequential or special damages arising out of or in any way connected with access to or use of this information.