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The program provides cash-flow assistance through 100% federally guaranteed loans disbursed to employers who are maintaining their payroll during the COVID-19 emergency. Employers who maintain payroll are eligible for loan forgiveness. They are also eligible for up to 8 weeks of payroll forgiveness based on employee retention and salary levels.
There are no SBA fees and six to twelve months of deferrals. Small businesses and other eligible entities will be able to apply if they had economic injury as a result of the COVID-19 emergency between February 15, 2020 and June 30, 2020. The program is retroactive to February 15, 2020 to incentivize businesses to bring employees who have already been laid off back onto the payroll.
Any eligible businesses and entities must have been in operation on February 15, 2020.
Small businesses, 501(c)(3) nonprofits, 501(c)(19) veterans organization, and tribal business concerns that has fewer than 500 employees or the applicable size standard for number of employees set out by the North American Industry Classification System (NAICS) as provided by the SBA.
Individuals who operate a sole proprietorship or who operate as an independent contractor.
Eligible self-employed individuals.
Any business that employs not more than 500 employees per physical location of the business, and that is assigned a North American Industry Classification System code beginning with 72, for which the affiliation rules are waived.
Affiliation rules are also waived for any business concern operating as a franchise that is assigned a franchise identifier code by the SBA, and company that receives funding through a Small Business Investment Company.
The PPP funding can be used for compensation—salary, wage, commission, payment of cash tip or equivalent. It can also be used for payment of vacation, parental/family, medical or sick leave.
75% of the PPP loan needs to be used for payroll cost. the other 25% can go to the other approved costs (mortgage interest, rent, utilities, other interest accrued from debt obligation.
The loan can also be used to pay for healthcare benefits (including insurance premiums), payment of retirement benefits, and payment of state or local tax assessed on employee wage compensation.
To apply for a PPP loan, you’ll need:
You can apply for both. However…
If you ultimately receive a PPP loan or refinance an EIDL into a PPP loan, any advance amount received under the Emergency Economic Injury Grant Program would be subtracted from the amount forgiven in the PPP. However, you cannot use your EIDL for the same purpose as your PPP loan. For example, if you use your EIDL to cover payroll for certain workers in April, you cannot use PPP for payroll for those same workers in April, although you could use it for payroll in March or for different workers in April.
The PPP covered loan period is retroactive to February 15th, 2020 through June 30th, 2020.
If you took out an Economic Injury Disaster Loan between February 15, 2020 and June 30, 2020 and you want to refinance that loan into a PPP loan, you would add the outstanding loan amount to the payroll sum.
Eligible for Payroll
NOT Eligible for Payroll
You must apply through your lender for forgiveness on your loan.
You must include:
Any loan amount that is not forgiven at the end of one year is carried forward as an ongoing loan with max terms of 10 years, at a max 4% interest.
Principal and interest will continue to be deferred for a total of 6 months to a year after disbursement of the loan.
No. An entity is limited to one PPP loan.
Each loan will be registered under a taxpayer identification number with the SBA to prevent disbursement of multiple loans to the same entity.
All current SBA 7(a) lenders are authorized to disburse PPP loans.
The Department of Treasury will be in charge of authorizing new lenders, including non-bank lenders, to help meet the needs of small business owners.
To learn about SBA 7(a) lenders, visit the SBA’s site: https://www.sba.gov/partners/lenders/7a-loan-program/types-7a-loans