The program is set to go LIVE APRIL 3 – Act Now to participate!
On Friday, the CARES Act was signed into law. One of the most significant provisions for small business and non-profits is the Paycheck Protection Program, or PPP.
The PPP provides a government-guaranteed loan to small businesses, and in most cases a large portion of the loan will be FORGIVEN. The remaining balance can be paid over time at a low interest rate, or immediately repaid with no penalty. This is intended to be a stimulus for small businesses and non-profits to make it through an uncertain economic time; being used to keep staff on payroll, re-hire individuals who have been laid off or furloughed due to a downturn in business, or other possible uncertainties that could arise.
The CARES Act put $350 billion into this program, but we are advising clients to act fast SBA just released the forms yesterday.
The amount of the loan is 2.5 times your average monthly payroll costs for 2019 including wages to employees, health benefits, 401k/retirement benefits, and 1099 contract labor.
The amount of the loan forgiveness is the amount you spend on payroll and certain other qualified expenses (rent, utilities, mortgage interest) during the 8-week period after you receive the loan. The loan forgiveness amount might be reduced if your payroll levels (# of employees and dollars) are lower than previous averages. The goal is to get your payroll levels (employees and dollars) back up or at normal levels.
As we understand it, the loan program is not limited to businesses that have been shut down or have already lost substantial amounts of revenue. The business must self-certify that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant”.
What you need to do, as soon as possible:
- Contact us via email or phone regarding your specific situation.
- Contact your bank. Make sure they are participating in the program and are ready to file paperwork as soon as the SBA allows it (possibly as soon as this Friday).
- Make sure you are an eligible small business – generally less than 500 employees. If you think you might be close to that, we’ll walk through the nuances of the calculation.
- Review the application. Fill out the relevant information and Q&A section. We’ll help with the amounts.
- Gather your payroll reports for 2019 – W2s, 941s, 940, 1099 and 1096. Include reports for State/local taxes paid by the employer on wages.
- Prepare a monthly schedule showing each employee’s compensation amount for each month of 2019. Employees down the rows, months across the columns.
- Prepare a monthly schedule for 1099 contractors also.
- Highlight employees or contractors making more than $100,000 annualized ($8,333 per month).
- Prepare a report showing Health Insurance and 401k/retirement employer contributions, by employee, for 2019.
- If any of this information is going to take time to gather, email us or your bank to find out if it is absolutely necessary. Time is critical right now.
Lenders are still waiting on final regulations so changes may occur over the coming weeks as guidance is issued.
Contact us now and we will help you get everything together and help you coordinate submission to your bank. You can Click Here to quickly and safely send us any of you confidential information.
Application: Paycheck Protection Application Form
Additional Information:US Chamber Information on Paycheck Protection Program