The information shared in this episode is for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.
As a small business owner, times are certainly challenging right now. Most float centers have closed their doors and now need financial assistance to cover expenses and take care of their employees. For this live-recorded episode, we invited anyone in the industry to join us as we talked to Jesse Calm, a small business attorney who shared information about the Paycheck Protection Program, which is an element within the recently passed CARES Act in the United States.
The PPP, administered through the SBA, is a loan that may be partially forgivable. If you’re interested in applying for it, talk to your local bank immediately, ideally one with whom you already have a working relationship. Jesse, among others in the crowd, shared details about loan eligibility, amount eligibility, and how to qualify for forgiveness of some or all of the loan. Please note that this information is accurate at the time of recording, but because the application goes live two days after recording (on Friday, 4/3/2020), some details may change. It is crucial to talk to your professional team for the nuances of your situation.
To be eligible for the PPP loan, you must have fewer than 500 employees and be located within the United States, and you must review statements and certify that your business has been impacted by the COVID-19 situation.
The loan amount for which you’re eligible is calculated based on your average monthly payroll cost times 2.5 months. After eight weeks, you may be eligible for forgiveness of some or all of that amount, based on the total full-time employees (or combination of part-time employees who add up to 35 hours a week to be considered full time) before the event, compared to the average number of full-time employees (or combination of part-timers) over the course of that eight weeks. If you have already laid off your employees, you might still benefit from the program as a two-year loan with a 0.5% interest rate, but may not be eligible for forgiveness. You must be able to provide receipts and paystubs for payroll costs, rent, utilities, and interest payments, but 75% of the loan does need to be used for payroll in order to be eligible for for loan forgiveness.