Paycheck Protection Program Update
Key CARES Act Relief Programs

The CARES Act economic relief bill is intended to help both individuals and small businesses through the pandemic crisis. Two key components of this bill that target small business relief are the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan Program (EIDL) . Although both of these relief programs can be utilized by small businesses, the PPP has the unique feature of providing forgivable operating capital loans to small businesses seeking to maintain their payroll during the crisis and remain in business once the opportunity to operate normally returns. Here are some of the key details of the PPP program and the program's application process.
Program Details:

How Does the PPP Work?
  • The loan is obtained through your bank and the Small Business Administration (SBA) provides the bank a 100% loan guarantee. The approval process from your bank is quite simplified and designed to be quick funding.
  • There is no cost to apply
  • The funding is meant to help retain workers, maintain payroll, and cover rent/mortgage/utility expenses
  • The loan can be “FORGIVEN” and essentially turn into a non-taxable grant if used for continuation of payroll and payment of rent, mortgage interest, and utilities.
 
Who Qualifies?
  • Most likely, you qualify! 
  • Small businesses that employ less than 500 employees are eligible for the PPP
  • Even if you can get a loan or credit somewhere else, that will not disqualify you for the PPP
  • You need to demonstrate that your business was economically impacted by COVID-19 ( as most of practices have been)
 
What is the Loan Amount Available?
  • The loan amount is the LESSER of
  • Two and a half months payroll costs using the average of monthly payroll incurred during the 1 year period before the date the PPP loan is made, or
  • The Maximum loan amount of $10,000,000
  • Certain salaries will be restricted from inclusion in the calculation – any salaries above $100,000 per year
 
What are PPP Loan Details?
  • No personal or business collateral is required
  • No personal guarantee/endorsement is required
  • Loan will be FORGIVEN up to the amount spent by you during the 8 week period after funding for the following:
  • Payroll Costs, including additional wages such as tips paid to employees
  • Interest payment on any mortgage that was in place prior to 2/15/20
  • Rent on any lease that was in place prior to 2/15/20
  • Utilities
  • The Loan forgiveness is an enhancement to encourage continuation of payroll. Therefore, the forgiveness will be reduced proportionately by any reduction in employees retained compared to the prior year and reduced by the reduction in pay of any employee beyond 25% of their prior compensation
  • Any amount of loan in excess of amounts spent for qualifying expenses in the 8 week period will not be forgiven and will be carried forward as a loan with terms of a max of 10 years, with a maximum interest rate of 4%
  • You must certify that the funds will be used to retain workers
Application Process:

  • You will apply for your loan through any existing SBA lender bank. It is recommended to contact your banker as soon as possible to inquire about their ability and readiness to process your application
  • The dates upon which you can begin to apply for a PPP loan are as follows:
  • April 3 - for small businesses and sole proprietorships
  • April 10 - independent contractors and self-employed
  • Documentation you will need:
  • PPP Application Form (Available HERE)
  • 2019 and YTD 2020 payroll registers
  • 2019 tax return or 2019 financial statements (P&L and balance sheet)
  • If you have any group health programs or any retirement programs in effect, you will need to provide that information as well.
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