COVID-19 is affecting both the physical and financial health of the country as days go by and small business owners are wondering how they are going to survive. To assist, the Coronavirus Aid, Relief and Economic Security (CARES) Act was recently passed and can be the lifeline that organizations have been hoping for. The act includes a loan program called the “Paycheck Protection Program,” (PPP) which is a $349 billion loan program designed to help businesses and non-profits stay afloat.
The loans will be granted to organizations that maintain their payroll during this time and they may be forgiven later on. Here is some information on some important questions that you may have regarding these loans.
Are you eligible?
Yes if you are:
- A small business with fewer than 500 employees
- A 501c(3) organization with fewer than 500 employees
- An independent sole proprietor or independent contractor
What will lenders be looking for?
A good faith certification that:
- The uncertainty of the current situation makes the loan request necessary to support ongoing operations
- Borrower will use loan to retain workers or make mortgage, lease and utility payments
- Borrower does not have a duplicate loan application
- How much can you borrow?
- Employers: Loans can be up to 2.5 x the borrower’s average monthly payroll costs , not to exceed $10M
- Sole proprietors, Contractors and Self-Employed: Sum of payments of any compensation (commission, income, net earnings) that is in an amount not more than $100K in one year, as pro-rated for the covered period.
Will the loan be forgiven?
Eligible to be forgiven equal to the amount the borrower spent on the following items during the 8-week period beginning on the date of the origination of the loan.
- Payroll Costs
- Interest on mortgage obligation
- Rent on a leasing agreement
- Payments on utilities
- Loan forgiveness cannot exceed principal and loan forgiveness could be reduced
Where can I apply?
Your best chance of getting an application submitted is working with your existing bank. Some of the bigger banks seem to be prioritizing clients that have existing credit lines or prior loans but you can also try your local community banks.
Here is the form you can use to do your calculations: Borrower Paycheck Protection Program Application
LTD Global is Here For You
Need help with your PPP calculation? LTD Global is here for you during this time. LTD Global has been assisting small businesses and non-profits with their accounting needs for years and we can help your organization stay on track during this period of economic stress. To find out more on how we can help, contact LTD Global for more details