The Department of Treasury has released the Paycheck Protection Program application and supplemental information, all available on their website.
Sample Application for the Paycheck Protection Program is Now Available: https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Application-3-30-2020-v3.pdf
Lenders may begin processing loan applications as soon as April 3, 2020.
Currently, the SBA has a number of programs available through the $2 trillion CARES Act, the largest aid package in American history. One in particular companies should be reviewing is Paycheck Protection Program:
The Paycheck Protection Program (“PPP”) is an emergency lending facility, administered by the Small Business Administration (SBA), to permit small businesses, nonprofits, and individuals to obtain loans via the 7(a) Loan Program (“PPP Loans”). A link to the full bill is located here.
- No personal guarantee or collateral.
- There is no cost to apply. (Zero fees)
- The funding is meant to help retain workers, maintain payroll, and cover rent, mortgage, and utility expenses under specific conditions.
PPP Loans are available through June 30, 2020, for any business, nonprofit, veterans organizations, or Tribal business with 500 or fewer employees including sole proprietors, independent contractors, and eligible self-employed workers that were in operation as of March 1, 2020, and had employees for whom the borrower paid salaries and payroll taxes.
Eligible recipients can borrow the lesser of $10 million or:
- 2.5 X the average total monthly payments by the applicant for payroll costs incurred during the 1-year period before the date on which the loan is made, except that, in the case of an applicant that is seasonal employer, as determined by the Administrator, the average total monthly payments for payroll shall be for the 12-week period beginning February 15, 2019 or at the election of the eligible recipient, March 1, 2019, and ending June 30, 2019;
- If a company was not in business February 15th through June 30, 2019 then they use the average total monthly payments for payroll costs incurred during the period beginning on January 1, 2020 and ending on February 29, 2020; by
Note: “Payroll costs” does not include compensation exceeding an annual salary of $100,000 but does include: the sum of payments of any compensation with respect to employees that is:
- salary, wage, commission, or similar compensation;
- 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; or
- payment of State or local tax assessed on the compensation of employees; and
Can be used for:
- payroll support, including paid sick, medical, or family leave, and costs related to the continuation of group health care benefits during those periods of leave;
- employee salaries;
- mortgage payments;
- rent (including rent under a lease agreement);
- utilities; and
- any other debt obligations that were incurred before the covered period.
It may be wise for your employees to seek help from other locations if they are in need of payroll support and you are unsure if this can be covered by your own costs. You can see this site as an example of one such company that could assist them. During these unprecedented times of economic uncertainty, managing your payroll effectively has never been more important. Consequently, if your business currently handles your payroll internally, but other processes are slowing down, there seems to be no clear understanding of employee compliance, too many mistakes are being made, and you fear that your business is losing sight of core competencies, then it might be time to outsource your payroll to a payroll processing specialist like CloudPay. Outsourcing your payroll can be especially effective if you work for a global business with employees on the payroll based in multiple countries. To learn more about payroll outsourcing opportunities with CloudPay, head to https://www.cloudpay.net/resources/understanding-payroll-in-the-united-kingdom-what-global-companies-need-to-know-about-uk-payroll.
The loan may be forgiven under certain circumstances at the end of the eight-week period after a company takes out the loan IF the PPP Loan participant submits an application for forgiveness to the original lender. Companies should contact their lender for the process to submit the request. No eligible recipient will receive forgiveness without submitting to the lender that originated the covered 7 loan the necessary documentation required under the act.
The amount of forgiveness is dependent on the recipient maintaining payroll continuity during the covered period. The amount of forgiveness decreases if the recipient decreases the size of its full-time workforce below certain amounts during the covered period or reduces any employee’s salary or wages by more than 25% of the employee’s total salary or wages earning during the most recent quarter preceding the loan.
For purposes of the Internal Revenue Code of 1986, any amount which (but for this subsection) would be includible in gross income of the eligible recipient by reason of forgiveness shall be excluded from gross income.
Evergreen Advisors is closely monitoring any guidance and will continue to bring you updates as they come. As always, if you have any questions or concerns, please feel free to give us a call or send us an email. See the full bill here: https://www.congress.gov/bill/116th-congress/house-bill/748/text#toc-HB37C431F57484034A3D8B58B1EC16623