| In order to help small businesses during COVID-19 shutdowns and economic uncertainty, Congress created the Paycheck Protection Program (PPP) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act on March 25, 2020. The CARES Act allowed for $349 billion to be given to small businesses for loans. However, as businesses still faced uncertainty, the federal government created more financial relief. On June 5, 2020, Congress extended the guidelines of the PPP for small businesses to obtain loans from the Small Business Administration (SBA). The Paycheck Protection Program Flexibility Act (PPPFA), passed on June 5, 2020 offers $310 billion additional funding for loans for small businesses. The loans from the PPP can be made up to 2.5 times the payroll costs not exceeding $10 million. The PPP is available for businesses with 500 employees or less. This includes self-employed individuals, sole proprietorships, S-Corporations, C-Corporations, LLCs, independent contractors, non-profits, farms and agricultural producers, veterans’ organizations, faith-based organizations, and tribal concerns. Through the PPPFA, the use of the loan on payroll expenses is reduced from 75% to 60% which allows businesses to use more of the loan to pay for non-payroll expenses such as utilities, mortgage interest, and rent. The eight-week timeframe to spend the loan was extended to 24-weeks; however, businesses can still use the original eight-week timeframe if desired. Also, the PPPFA extended the date to replace the number of full-time employees and restore salaries from June 30, 2020 to December 31, 2020. Even if your business did not meet the 60% payroll expenses, you may still obtain partial forgiveness. The non-forgiven portion of the loan has various payback options that will be explained in forthcoming information. To receive a PPP loan, you can apply to any SBA-approved lender. On June 17, 2020 the SBA released a new, simplified five-page forgiveness application which can be viewed here. There is also a three-page EZ application for borrowers that are qualified by being self-employed and have no employees, not reducing hours, wages, and salaries by more than 25%, or are experiencing reductions in business activity and did not reduce wages and salaries by more than 25%. There is still close to $130 billion in available loans from the PPP, so if you believe you qualify for this loan, please contact your local lender. The deadline for PPP loan application approval is June 30, 2020. Some local banks still have funds available; however, if not, there are several fin-tech companies that can help you find a lender. If we can be of assistance in helping you gather data or assessing your individual situation, please contact one of our professionals. Sources: https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program https://www.nytimes.com/2020/06/10/business/Small-business-loans-ppp.html https://www.journalofaccountancy.com/news/2020/jun/partial-ppp-loan-forgiveness-remains-60-percent-threshold.html https://www.wisbank.com/articles/2020/06/breaking-sba-releases-ez-application-revises-ppp-loan-forgiveness-application/ |
