As of last week, the Coronavirus Aid, Relief, and Economic Security (the Cares Act) is signed going into effect. There are multiple layers to this relief package, however one of the key provisions is the Paycheck Protection Program (PPP). The PPP is intended to provide owners with "whatever they need right now", providing 2.5x the 2019 monthly average of qualified payments. These payments include payroll, rent, utilities and more.
See below for simplified information or click here for a complete FAQ of all of the programs.
How Does My Business Apply for the Paycheck Protection Program?
Please reference this article and use the FAQ sheet linked above to familiarize yourself with the act and qualifications. After you organize and complete your application, you can submit it to your bank and they will guide you the rest of the way.
Who Can Apply For The Cares Act?
Any small business who has been or forecasts that they will be negatively impacted by the Coronavirus outbreak.
What Type of Relief is Being Offered?
The government is offering relief to help cover wages, salaries, utilities, rent and mortgage payments for your business. Please see below for a quick list.
- salary, wage, commission, or similar compensation (but not exceeding 100,000 per employee per year)
- payment of cash tip or equivalent;
- payment for vacation, parental, family, medical, or sick leave
- allowance for dismissal or separation
- payment required for the provisions of group health care benefits, including insurance premiums
- payment of any retirement benefit
- payment of state or local tax assessed on the compensation of the employee (state unemployment, FMLA, etc.).
How Businesses Are Allowed to Use The Loan?
- Employees’ salaries, wages and commissions
- Costs related to group health care benefits
- Payments of interest on any mortgage obligation, but not any prepayment of or payment of principal on a mortgage obligation
- Interest during covered period on any other debt obligations that were incurred before February 15, 2020
- Rent under a lease agreement in force by February 15, 2020 and utilities during covered period
The amount eligible to be forgiven is the sum of the expenses paid as described above during the eight-week period after the covered loan is originated.
What Paperwork Will I Need?
You will need relevant paperwork pertaining to your businesses including:
- Business financial statements from 2019
- A statement from a majority owner stating that all information submitted is in fact true and accurate.
- The PPP application itself
- Addendum attached for any additional businesses an owner of your company has a stake in
- Lease contracts, mortgage tables, interest tables and any other proof of lease, rent and utilities
We have heard some businesses needing a certificate of good standing - this will be something you can ask your banker. You can find more information on the Certificate of Good Standing here
What If I Have More Questions?
Your business bank and business accountant will be your best resources when filling out the application. We encourage you to use them to answer any questions specific to the application and your business.
Paul T. Murphy | President