Paycheck Protection Program

Melissa Clary Business, News 0 Comments

There is a new emergency loan program that will provide cash-flow assistance to those small businesses impacted by the current COVID-19 quarantine situation.  The Paycheck Protection Program, commonly referred to as the PPP, is a program that is structured to fit similar criteria of an SBA loan and is available to businesses that meet the definition of a small business.  SBA 7(a) banks that are currently FDIC approved as PPP lenders will be providing these loans.
• No lender fees
• Available until June 30th, 2020
• Eligible if less than 500 employees
• Can operate as a sole proprietor with no employees
• Business had to be in operation on February 15th, 2020
• Eligible recipients may qualify for a loan up to $10 million based on an 8-week prior average payroll plus an additional 2% of that amount.
PPP Loan proceeds can be used for;
• Payroll Costs
• Group Healthcare
• Rent and/or Mortgage interest
• Utilities – includes phone and internet
These expenses listed above need to be paid during the first eight weeks after the loan is made.
Up to $10,000 of this loan can be forgiven once you go back through and reconcile these costs during that covered 8-week period.  You must apply through your lender for forgiveness.  Forgiven amounts will not be considered cancellation of debt for federal income taxes and you would not have to pay income taxes on it.
When applying for forgiveness you will need to supply;
• IRS and state payroll tax filings
• Documentation verifying the number of employees on payroll and their rates
• Certification that the documentation provided is true and in accordance with the rules from the lender
Any amount not forgiven will bear interest at a maximum rate of 4 percent and needs to be paid back in full before 10 years.  Initial payments on these loans will be deferred between 6 to 12 months.   The lender will give guidance on the deferral period and has all waived prepayment penalties.
Interested in seeing the application for a PPP loan, please go to the following link:
https://home.treasury.gov/system/files/136/Borrower%20Paycheck%20Protection%20Program%20Application%20%28v1%29.pdf
Most all lenders who are SBA approved will be providing these loans.  Check with your local bank/lender and you can also apply with BoeFly
Call Key2 Accounting today if you have any questions about the Paycheck Protection Program.

 

 

 

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