Update 06/05/2020... PPP changes signed into law today. More tweaks are expected. SO WAIT... DO NOT APPLY FOR LOAN FORGIVENESS YET. Wait for all of the details to be corrected, amended and interpreted. It can only help you to wait.
Some of the changes: PPP borrowers can choose to extend the eight-week period to 24 weeks, or they can keep the original eight-week period.
The payroll expenditure requirement drops to 60% from 75%.BUT IS NOW A CLIFF, meaning that borrowers must spend at least 60% on payroll or NONE of the loan will be forgiven.
Borrowers can use the 24-week period to restore their workforce levels and wages to the pre-pandemic levels required for full forgiveness. This must be done by Dec. 31, a change from the previous deadline of June 30.
The legislation includes two new exceptions allowing borrowers to achieve full PPP loan forgiveness even if they don’t fully restore their workforce. Previous guidance already allowed borrowers to exclude from those calculations employees who turned down good faith offers to be rehired at the same hours and wages as before the pandemic. The new bill allows borrowers to adjust because they could not find qualified employees or were unable to restore business operations to Feb. 15, 2020, levels due to COVID-19 related operating restrictions.
Borrowers now have five years to repay the loan instead of two. The interest rate remains at 1%.
Small Business Emergency Loan PPP Paycheck Protection Loan... apply via your bank by 08/08/20
04/21/20 update... my current advice to small business clients is that collecting unemployment may be a better option than this program. There are a lot of hoops to jump through with the application as well as applying for loan forgiveness. The forgiveness is not guaranteed (the bank has final say). So loans under $10k are probably not worth the effort in my opinion. Collect unemployment instead.
Currently 1.0% interest (but can increase to 4%), 2 year term, up to $10 million
Can borrow up to 2 .5 months of payroll costs... based upon 12 months prior to loan date
Loan payments are deferred for 6 months to 1 year.
Has potential to be partially forgiven!!!
Forgiveable portion of the loan is 8 weeks of certain operating expenses (payroll costs, interest payments, rent/lease payments, utility payments)... incurred after loan origination date.
The costs forgiven had to be present before 02/15/20 (so must be old recurring costs, not brand new costs).
Forgivable amount may be reduced if business reduces its employee count as compared to what it was in 2019.
Forgivable amount may be reduced if compensation drops by more than 25% compared to prior year.
Eligible payroll does not include compensation above $100k in wages, payroll taxes and any sick or family leave as part of the recent Families First Coronavirus Response Act.
Any related loan forgiveness will not be taxable to you (usually is taxable).
no collateral or personal guarantees required
requires 500 or less employees
Affiliations with similarly owned companies can be a factor.
Who can apply?
Any business with 1-500 employees.
A sole proprietor (assumed also to include partner/LLC with self-employment income).
You must certify that the loan request is necessary due to current or anticipated economic conditions and uncertainty resulting from Covid-19.
What can the money be used for? payroll costs, mortgage interest, rent, utilities
requires that you were in business prior to 02/15/2020