With Congress passing the Coronavirus Aid Relief and Economic Security (“CARES”) Act, approximately $350 billion is being made available to qualifying businesses for a variety of emergency loans; including the Paycheck Protection Program (“PPP”) Loans.
What are PPP Loans?
PPP loans provide cash-flow assistance through 100% federally guaranteed loans to employers who maintain their payroll during this emergency. If employers maintain their payroll, these loans may be forgiven as detailed below. These loans will be available retroactively from February 15, 2020 through June 30, 2020.
What types of businesses and entities are eligible for PPP Loans?
For any amounts not forgiven, the maximum term is 10 years, the maximum interest rate is 4%, no loan fees, no prepayment fees.
How is the forgiveness amount calculated?
Forgiveness on a covered loan is equal to the sum of the following payroll costs incurred during the covered 8 week period compared to the previous year or time period, proportionate to maintaining employees and wages (excluding compensation over $100,000):
You must apply for forgiveness through your lender. Your application must include:
Any loan amounts not forgiven are carried forward as an ongoing loan with max terms of 10 years, at a maximum interest rate of 4%. Principal and interest will continue to be deferred, for a total of 6 months to a year after disbursement of the loan. The clock does not start again.
Businesses/entities are limited to one PPP loan. These loans are registered under the taxpayer identification number. Any lender who provides SBA loans will be able to provide PPP loans.
What are PPP Loans?
PPP loans provide cash-flow assistance through 100% federally guaranteed loans to employers who maintain their payroll during this emergency. If employers maintain their payroll, these loans may be forgiven as detailed below. These loans will be available retroactively from February 15, 2020 through June 30, 2020.
What types of businesses and entities are eligible for PPP Loans?
- Businesses and entities, including sole proprietors and individuals, must have been in operation on February 15, 2020
- Businesses, including 501(c)3 non profit organizations, must have fewer than 500 employees. There are certain exemptions to this rule, please contact us for additional information if you believe that you qualify for an exemption.
- If your business was in operation from February 15, 2019 - June 30, 2019, your maximum loan is equal to 250% of your average monthly payroll costs during that time period.
- If your business was NOT in operation from February 150, 2019 - June 30, 2019, your maximum loan is equal to 250% of your average monthly payroll costs between January 1, 2020 and February 29, 2020.
- Regardless of average monthly payroll costs, the maximum loan may not exceed $10 million.
- If your business has an outstanding Economic Injury Disaster Loan (EIDL), this may effect your loan amount
- Compensation (salary, wage, commission or similar compensation, payment of cash tip or equivalent)
- Payment for vacation, parental, family, medical, or sick leave
- Allowance for dismissal or separation
- Payments required for the provisions of group health care benefits, including insurance premiums
- Payment of any retirement benefits
- Payment of state or local tax assessed on the compensation of employees
- Employee/owner compensation over $100,000
- Certain taxes imposed or withheld, call us for more details.
- Compensation of employees whose principal place of residence is outside of the U.S.
- Qualified sick and family leave for which a credit is allowed under sections 7001 and 7003 of the “Families First Coronavirus Response Act”
- Eligible payroll costs (as noted above)
- Payments of interest on any mortgage obligation (which can not include prepayments)
- Rent
- Utilities
- Interest on any other debt obligation
For any amounts not forgiven, the maximum term is 10 years, the maximum interest rate is 4%, no loan fees, no prepayment fees.
How is the forgiveness amount calculated?
Forgiveness on a covered loan is equal to the sum of the following payroll costs incurred during the covered 8 week period compared to the previous year or time period, proportionate to maintaining employees and wages (excluding compensation over $100,000):
- Eligible payroll costs PLUS any payments of interest on any covered mortgage (excluding prepayments) PLUS any payment on any covered rent obligation PLUS any covered utility payments
You must apply for forgiveness through your lender. Your application must include:
- Documentation verifying the number of employees on payroll and each employees pay rate. This documentation includes IRS payroll tax filing (forms 941, 940, etc) and state income,, payroll and unemployment insurance filings.
- Documentation verifying payments on covered mortgage obligations, lease obligations, and utilities
- Certification from a representative of your business or organization that is authorized to certify that the documentation provided is true and that the amount that is being forgiven was used in accordance with the program’s guidelines for use
Any loan amounts not forgiven are carried forward as an ongoing loan with max terms of 10 years, at a maximum interest rate of 4%. Principal and interest will continue to be deferred, for a total of 6 months to a year after disbursement of the loan. The clock does not start again.
Businesses/entities are limited to one PPP loan. These loans are registered under the taxpayer identification number. Any lender who provides SBA loans will be able to provide PPP loans.