Navigating the SBA Paycheck Protection Program

There has been a lot of information going around regarding how and when to apply for the Paycheck Protection Program (PPP), who can apply, and how much will be forgiven. Things have finally settled in and here are all the details you‚Äôll need to know:

When can I apply?

Starting April 3, 2020, small businesses and sole proprietorships can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders.
Starting April 10, 2020, independent contractors and self-employed individuals can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders.
Other regulated lenders will be available to make these loans as soon as they are approved and enrolled in the program.

Where can I apply?

You can apply through any existing SBA lender or through any federally insured depository institution, federally insured credit union. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. Reach out to your current bank to see if they are accepting applications. Visit www.sba.gov for a list of SBA lenders.

Who can apply?

All businesses ‚Äì including nonprofits, veterans organizations, Tribal business concerns, sole proprietorships, self-employed individuals, and independent contractors ‚Äì with 500 or fewer employees can apply.

Here‚Äôs what to have prepared before you start the application:

Payroll reports for each of the last 4 quarters April 1^st, 2019 through March 31^st, 2020.
A copy of your photo ID (front and back)
State Unemployment Tax info April 1^st, 2019 through March 31^st, 2020. (You can get this from your payroll company or through payroll reports on your accounting software)
Local Tax Payment Information
All reports showing employer contributions to retirement accounts April 1^st, 2019 through March 31^st, 2020.
Reports showing your health insurance contributions April 1^st, 2019 through March 31^st, 2020.

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What can I use these loans for?

You should use the proceeds from these loans on your:

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
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, allowance for separation or dismissal, payments required for the provisions of group health care benefits including insurance premiums, and payment of any retirement benefit
State and local taxes assessed on compensation
For a sole proprietor or independent contractor: wages, commissions, income, or net earnings from self-employment capped at $100,000 on an annualized basis for each employee.

Will the loan be forgiven?

The loan amount will be forgiven in its entirety as long as:

The loan proceeds are used to cover payroll costs, most mortgage interest, rent, and utility costs over the eight-week period after the loan is made
Employee headcount is maintained
Compensation levels for employees earning less than $100,000 per year are maintained; and
Not more than 25% of the loan amount is used for non-payroll costs. To the extent that any of these factors are not satisfied fully (or a business does not use the full amount of the PPP loan in the eight-week period after the loan is made), a portion of the loan will not be forgiven and must be repaid.

To receive loan forgiveness, a borrower must apply to their lender with documents verifying payments (on mortgage interest, rent, and utilities) and payroll (number of employees, pay rates, including IRS payroll tax filings and state income, payroll, and unemployment insurance filings). These documents must be certified from a representative of the business that the information is true.

If you have any additional questions regarding this program, please feel free to reach out. We are here for you during these trying times.

Disclaimer: This alert is for informational purposes only and does not constitute professional advice. Information contained in this communication is not intended or written to be used as tax advice & cannot be used by the recipient to avoid penalties that may be imposed under the Internal Revenue Code. We strongly advise you to seek professional assistance with respect to your specific issue(s).

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