What Is The Small Business Paycheck Protection Program?
Many small and large businesses have been damaged and affected in one way or another by the Covid-19 crisis that is currently affecting our Country. In response to the pandemic, the current presidential administration, along with congress, has approved a two trillion dollar ($2 Trillion), federal coronavirus relief which is officially known as the CARES Act.
Americans everywhere are wondering what this means for small businesses and how they can apply. The plan is called the Paycheck Protection Program and it includes nearly three hundred and fifty billion dollars ($350 billion) focused on helping small businesses to keep employees on payroll by receiving financial support through possible loan forgiveness.
PereGonza The Attorneys has taken this time to break down some pieces of the relief plan for our community. We are not CPA’s so please make sure to consult with your CPA in order to apply properly according to your current specific tax situation.
How Can My Small Business Apply For the Paycheck Protection Program?
It’s simple the program has developed a speedy application process with a network of providers that work with the SBA. You can find the application on the Treasury Department’s CARES Act resource page, follow the instructions on the application with your CPA, if possible. Applicants can apply through one of the approved lenders or you can contact the SBA to find an approved lender you can work with. These are being processed on a first come first serve basis so apply as soon as possible if needed.
The approval process will be handled by approved lenders, this is important because that means there is no separate review being conducted by the SBA. In fact, it is said that there may be a system set in which borrowers will be able to receive funds on the same day of application, at least thats supposed to be a goal and there are many experts that say this is very ambitious.
What Should My Small Business Use This Loan For?
Essentially, these are set for the purpose of payroll which would include paying employees wages that are based on salaries, commissions and in some cases even tips. However, these will be capped at $100,000 for each employee. Additionally, it includes benefits for vacation, parental leave, medical leave, sick leave, along with business rent and utilities set before February 2020.
Will My Small Business Be Forced To Payback Interest?
Essentially, this is a loan and by definition there should usually be interest involved in many cases. The Treasury Department is said to be setting a 0.5 percent rate and the rate is capped at 4 percent by the CARES Act, maximum.
Does My Small Business Qualify For The Program?
The program is designed for Small businesses and many should qualify. A business and/or nonprofit, that are in compliance with the SBA’s standard business size along with veterans organizations formed in compliance under 501(c)(19) with fewer than 500 employees are eligible.
Disqualifying factors include things such as if the business or owners are currently in any bankruptcy process; if the business or its owners were debarred, suspended, declared ineligible or excluded along with those individuals that have not been but are in the process of debarment. Also, those currently receiving a paycheck protection program loan or those businesses who have ever taken an SBA loan and caused a loss to the government, defaulted or those who are currently delinquent on those payments. Finally, businesses where a 20 percent owner is currently subject to criminal charges or has been convicted or otherwise punished for a crime against a minor will be excluded.
How Much Financial Assistance Can My Small Business Receive?
The crisis program actually provides for 2.5 times your total payroll expenses for the loan period. This attributes to costs incurred potentially from February 15 through June 30 with limitations of ten million dollars ($10 million).
Will The COVID-19 Small Business Loan Be Forgiven By The Government?
The Paycheck Protection Program loan is designed to help businesses in crisis and there is a possibility of forgiveness. If fact, this program includes forgiveness of costs for the first eight weeks of the loan for companies that maintain employees on payroll or continue paying expenses through the current Covid-19 crisis. It also includes payroll costs for individuals below $100,000 in annual income, rent expenses and utility payments. The forgiveness amount is reduced if wages are reduced or if employees are laid off.
PereGonza The Attorneys
We here at PereGonza always have the community’s best interest at heart. We aren’t the official attorneys for the Doral Chamber of Commerce and a trustee of the Hialeah Chamber of Commerce just because we like to be active in our communities. We care for the citizens of Miami and devote ourselves to supporting you and making sure you stay well informed!
There is much more you need to know about this loan and it is important that you understand that the best way to move forward with this option is by consulting with your CPA who should help you through the application process. This crisis is affecting everyone and the most important factor to keep our economy afloat is the small businesses that employ so many of our hard-working people.
Please be safe and look at all the options available to you to keep your business afloat. America needs you and our workforce.
PereGonza The Attorneys can offer a free consultation and give you insight on what the best course of action for any legal matter for your business, including business and corporate litigation along with contractual drafting and corporate representation. Whatever your specific case may be we would love to try and help. Fill out our personal intake form for more information.