Paycheck Protection Program

If you employ less than 500 people, you need to carefully investigate the Paycheck Protection Program (PPP).  Beginning tomorrow, you can file for a low interest rate loan that is designed to be forgivable.  Here are the details:

1. Generally applies to employers with less than 500 employees.  There are aggregation rules of affiliated companies for most industries.
2. Loans can be for up to two months of your average monthly payroll costs from the last year plus an additional 25% of that amount. That amount is subject to a $10 million cap.
3. Payroll costs include salary, wages, commissions, or tips (capped at $100,000 on an annualized basis for each employee); employee benefits including costs for vacation, parental, family, medical, or sick leave,  insurance premiums, retirement benefits; and state and local taxes assessed on compensation.
4. The loan amounts will be forgiven as long as the loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs over the 8 week period after the loan is made; and employee and compensation levels are maintained.
5. Loan forgiveness will be reduced if you decrease your full-time employee headcount or if you decrease salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019.   But you will have until June 30, 2020 to restore your full-time employment and salary levels for any changes made between February 15, 2020 and April 26, 2020.
6. The interest rate is 0.5%, all payments are deferred for 6 months, and the loan – if not forgiven – must be repaid within 2 years.  There is no prepayment penalty. No collateral or guarantees will be required.
7. You can apply through any existing SBA lender or through any federally insured depository institution, federally insured credit union, or farm credit system institution that is participating.

Here is a link to a sample application: https://www.sba.gov/sites/default/files/2020-03/Borrower%20Paycheck%20Protection%20Program%20Application_0.pdf

Stay safe and keep the course.  And please let us know if we can help.

Thanks, Jack, Elizabeth and Jim