Paycheck Protection Plan – Update and FAQ
April 17, 2020
With the recent launch of the CARES Act, many employers and business owners have asked PEOPLEASE about the Paycheck Protection Program (PPP).
The good news is that the majority of our clients have already submitted PPP applications and we’re hearing feedback that many are have been approved in less than a week.
Didn’t the money run out?
It is true that all $349 billion designated for the Paycheck Protection Program has been allocated just two weeks after the launch of the loan offering. While this is great news for those small businesses whose loans have already been approved, millions of applicants or would-be borrowers across the country are left without the desperately needed funds.
Treasury Secretary Steve Mnuchin and federal lawmakers are currently in talks with the goal of releasing additional funds to supplement the program, which supports small businesses affected by the COVID-19 pandemic.
What can my business do now?
The the Small Business Administration has stopped accepting applications, but if you submitted your application before April 16, 2020, your loan application may already be in the SBA approval queue.
Even if you have not started the process, it is not too late. Some lenders are still accepting applications. Others are collecting information from prospective borrowers in anticipation of additional funds becoming available.
If you haven’t applied for the loan yet, you’ll want to get your place in line now rather than wait until additional funding is approved and the SBA resumes processing PPP applications.
I want to apply, but…
If the application requirements and process seem overwhelming, you’re not alone. Here are some of the most common questions our clients asked us over the past week.
Q – IS MY COMPANY ELIGIBLE FOR A PPP LOAN?
A – All businesses with 500 or fewer employees can apply. Businesses in certain industries can have more than 500 employees if they meet applicable SBA employee-based size standards for those industries.
Q – WHEN CAN I APPLY?
A – You can apply now through June 30th to some lenders, who may keep your application on file until additional funds are released.
Q – WHERE CAN I APPLY?
A – You can apply through any SBA approved lender. It is often easiest to start with your current banking partner. If that is not an option, you can find a list of potential lenders here.
Q – WHAT IS THE MAXIMUM LOAN I AM ELIGIBLE TO RECEIVE?
A – Loans can be for up to two and a half times your average monthly payroll costs from the last year, up to a $10 million cap. Payroll costs are capped at $100,000 annualized for each employee.
Q – WHAT CAN THE LOAN BE USED TO PAY?
A – The loan can be used for payroll costs, including benefits, interest on mortgage obligations (incurred before February 15, 2020), rent (under lease agreements in force before February 15, 2020); and utilities (for which service began before February 15, 2020). Please note, the amount that will be forgiven may be adjusted (see more details below) if less than 75% is used on payroll costs.
Q – HOW MUCH OF THE LOAN IS FORGIVABLE?
A – Up to 100% of the loan may be forgiven, however the specific amount will depend on how you utilize the money. You will owe money when your loan is due if you use the loan amount for anything other than payroll costs, mortgage interest, rent, and utilities payments over the 8 weeks after getting the loan. It is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.
You will also owe money if you do not maintain your staff and payroll.
Q – I AM THINKING ABOUT UTILIZING ONE OF THE OTHER BENEFITS FROM THE STIMULUS PACKAGE. CAN I DO BOTH?
A – You may not be able to do both. You will need to think through your choices:
- If you obtain one of the new SBA loans, you are not eligible for the 50% employee retention tax credit.
- If you have a new SBA loan forgiven, you cannot take advantage of the Social Security tax deferral.
- If you claim the 50% employee retention credit, you will no longer be eligible for an SBA loan.
- In order to have a new SBA loan forgiven you may not take advantage of the Social Security tax deferral.
Q – HOW DOES WORKING WITH A PEO LIKE PEOPLEASE HELP ME WITH THE SBA LOAN?
A – Time is critical right now, especially when your business depends upon accurate and thorough reporting to apply for assistance. Over the past week, we’ve generated hundreds of customized reports for clients seeking SBA assistance – usually with same day delivery.
Having a reliable, experience partner to help guide you through the ups and downs of business is just one benefit of working with PEOPLEASE. Contact us at info@peoplease.com to learn more.