A Quick Guide on the Paycheck Protection Program

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There has been a lot of confusion around the Paycheck Protection Program (PPP). I’ve thus taken the liberty to track down some information on Treasury.gov to clarify some questions regarding the program. The Department of Treasury has issued a fact sheet that outlines guidelines for the program.

What is the Paycheck Protection Program?

The Paycheck Protection is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. To be eligible for a loan, an applicant must have fewer than 500 employees whose residence is in the United States or (ii) be a “small business” under the NAICS code employee size standard.

As part of the certification, you need to certify in good faith that:

  • Economic uncertainty makes the loan necessary to support the ongoing operations of your business
  • Funds will be used to maintain or rehire workers or make mortgage, lease, and utility payments
  • You will not receive another loan under this program
  • You will provide the lender documentation that verifies the number of full-time employees on payroll, mortgage interest, rent payments, and utilities
  • The loan forgiveness will be provided for these documented costs

What are the terms of the PPP Loan?

This loan has a maturity of 2 years and an interest rate of 1.00%. Loan payments will be deferred for 6-months; however, interest will continue to accrue over this period.

Are we allowed to include independent contractors on our payroll?

Any amounts that an eligible borrower has paid to an independent contractor or sole proprietor should be excluded from the eligible business’s payroll costs.

Your contractor should apply for his or her own PPP loan.

What do I need to do about payroll?

  • Not more than 25% of the forgiven amount may be for non-payroll costs
  • Forgiveness will be reduced if you decrease your full-time employee headcount
  • Loan forgiveness will be reduced if you decrease salaries by more than 25% for any employee that made less than $100,000 annualized in 2019
  • You have until June 30, 2020 to restore your full-time employment and salary levels for changes made between February 15, 2020 and April 26, 2020

If you plan on obtaining loan forgiveness for your PPP loan, follow these steps.

How do I obtain loan forgiveness?

To obtain loan forgiveness, you can submit a request to the lender servicing the loan 8 weeks after obtaining the loan.

  • To obtain loan forgiveness, you can submit a request to the lender servicing the loan
  • You should also include your mortgage payments, lease, and utilities
  • You must certify that the documents are true and that you used the money to keep employees, make mortgage interest payments, for rent or utilities

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