What is the Paycheck Protection Program?The Paycheck Protection Program is intended to provide cash-flow assistance to businesses through federally guaranteed loans. The loans are disbursed to employers who maintain their payroll during the COVID-19 declared emergency. Employers who comply with payroll maintenance are eligible for loan forgiveness for certain expenses and 8 weeks of payroll forgiveness. Payroll forgiveness will be determined by employee retention rates and salary levels. Unlike other loans provided by the SBA, the PPP loans are not subject to SBA fees. Payment can also be deferred for six to twelve months in an effort to ensure that businesses can make their other payments and keep their doors open in the wake of COVID-19. Small businesses can apply for the loans if they’ve experienced economic injury as a result of the COVID-19 declared state of emergency. The dates of economic injury are between February 15, 2020 and June 30, 2020. The CARES Act also provides that the program be retroactive to February 15, 2020 to incentivize employers to bring laid off and furloughed employees back onto their payroll.
How do you apply for the Paycheck Protection Program?You can apply for a PPP loan through any of the SBA’s pre-approved 7(a) lenders. These include banks, credit unions and other financial institutions. The CARES Act also gives the SBA the resources to approve additional lenders to accommodate the influx of applicants. A list of SBA-approved 7(a) lenders can be found here. To apply, you’ll need the following statements, reports and documentation:
- Your 2019 IRS Quarterly 940, 941 or 944 payroll tax reports
- The last twelve months of payroll reports beginning with your last payroll date
- 2019 IRS Form 1099 for any independent contractors that would otherwise be your employee
- Documentation showing total of all health insurance premiums paid by the company
- Documents showing the sum of all company-paid retirement funding
- Documentation showing employer contributions to 401K and IRA plans
What can I use my PPP funding for?Funding disbursed from your PPP loan can be used for any of the following:
- Employee compensation, including:
- Salary and wages
- Commission, cash tips or the equivalent
- Vacation time or Paid Time Off (PTO)
- Family, medical or sick leave
- Healthcare benefits and insurance premiums
- Retirement benefits
- State or local tax assessed on wage compensation
- Interest payments on mortgage obligations, not including principal
- Rent, including rent for a lease agreement
- Interest payments on other debts incurred before February 15, 2020
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