Under the CARES Act, two new temporary programs have been established to help cover the cost of payroll, rent, utilities and mortgages.

Paycheck Protection Program

https://www.sba.gov/funding-programs/loans/paycheck-protection-program

Companies with <500 employees can apply (if a food business, 500 per location).  If spent on the following the loan would be forgiven:

  • employees
  • mortgage
  • rent
  • utilities

The PPP is backed by the SBA – you can apply through an SBA-approved bank.

You can also defer your payroll taxes until 2021.

Maximum amount to borrow

  • 250% of your average monthly payroll expenses up to $10 million
  • Intended to cover 8 weeks of payroll expenses and any additional amounts for making payments towards debt obligations
  • 8 week period may be applied to any time frame between Feb 15 – June 30, 2020.

Amount of principal that may be forgiven is equal to the sum of:

  • expenses for payroll – salaries up to $100,000 per year
  • hourly wages
  • sick or medical leave
  • group health insurance premiums
  • existing interest payments on mortgages
  • rent payments
  • leases
  • utility service agreements
  • inventory – you can spend on that but the loan will not be forgiven

How much of my loan will be forgiven?

  • If you keep all of your employees, the entire loan will be forgiven
  • If you lay off employees, the forgiveness will be reduced by the % decrease in the number of employees if your total payroll expenses on workers making less than $100,000 annually decreases by more than 25%, you can still be forgiven the full amount if they are rehired by June 30, 2020.

What about interest?

  • If the full principal of the loan is forgiven, there is no interest.
  • The remainder of the loan will have loan terms agreed upon by you and the lender. Interest is capped at 4% with no fees and loan payments deferred 6 months – 1 year.

When is the application deadline?

Up until June 30, 2020.

Banks that are SBA approved lenders can handle the application.

SBA Disaster Assistance Loan

You can also apply for the SBA Economic Injury Disaster Advance loan…as long as it is applied to a different cost center.

https://covid19relief.sba.gov/#/

It applies to small business owners.  Benefits:

  • Up to $10,000 relief for businesses that are currently experiencing a temporary loss of revenue
  • Money will be loaned 3 days after successful application
  • The loan will not have to be repaid

Let me know how I can help you get through this difficult time.