Paycheck Protection Program Loan Assistance
The Paycheck Protection Program was first established under the CARES Act in March of 2020 and provides forgivable loans to small businesses affected by the pandemic.
100% Loan Forgiveness
On all authorized expenses.
Generally 2.5 times monthly payroll costs.
Businesses can get a second PPP loan.
Low Interest Rate
Low 1% APR for the entire life of PPP Loan.
Payments deferred for the first 10 months.
No collateral or personal guarantees required.
Frequently Asked Questions
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Small businesses with 500 employees or less that are financially affected by COVID-19, including:
- sole proprietor, independent contractor, or eligible self-employed individual
- S corporations, C corporations, Partnerships, and LLCs
- A tax-exempt not-for-profit organization – 501(c)(3)
- A tax-exempt veterans organization – 501(c)(19)
- Tribal business as defined by section 31(b)(2)(C)
- certain faith-based organizations
- Eligibility recently expanded to include news organizations, housing cooperatives, 501(c)(6) organizations, and destination marketing organizations (lobbying activities can not comprise more than 15 percent of receipts or activities).
- The PPP loan amount can be up to 2.5 times your average monthly payroll for either (a) 2019 or (b) 2020. That amount is subject to a $2 million cap.
- Businesses with NAICS Code 72 can borrow at 3.5 x average monthly payroll costs (e.i. restaurants, hotels, etc.).
Your PPP loan is eligible for 100% full forgiveness if 60% is used on payroll costs and the other 40% is used on SBA authorized expenses during the cover period.
Borrowers can choose a covered period that is between 8 and 24 weeks beginning on the date the borrower received the loan proceeds. Covered period for all PPP loans is extended through March 31, 2021.
In order to maximize loan forgiveness small business owners must:
- spend it on SBA authorized expenses in the right time period
- understand how loan forgiveness can be reduced
- keep an accurate account of expenditures and documentation
- follow the lender’s guidelines
PPP loan proceeds may be used to pay for the following expenses:
- Payroll costs including benefits; salary, wages, commissions, or similar compensation, cash tips or equivalent, Group health insurance, vacation, parental, family, medical, or sick leave, retirement benefit, and state or local tax assessed on the compensation of the employee
- Non-payroll costs (1) Interest payment on a mortgage that originated prior to February 15, 2020 (2) Payment of rent on a lease that began prior to February 15, 2020. (3) Payment on any utility for which service began before February 15, 2020.
The new legislation expands the permitted uses of loan proceeds to include:
- Operational expenses- payments for business software or cloud computing service used to facilitate operations
- Property damage costs- costs related to property damage, vandalism, or looting due to public disturbance in 2020 not covered by insurance
- Supplier costs- expenditures for contractually purchased goods that are essential to the business
- Worker Protection expenses- cost for items such as personal protective equipment to prevent the spread of the virus and comply with health and safety guidelines issued by the Department of Health and Human Services, the Centers for Disease Control, or the Occupational Safety and Health Administration, or any equivalent requirements established, or guidance issued by a State or local government
If part or all of the loan isn’t forgiven then you’ll have specific terms to pay back the required portion of the loan. Here what you need to know:
- the repayment period for PPP loans issued after June 5th, 2020 is 5 years.
- interest rate is 1%
- loan payments can be deferred for 10 months
- you can prepay at any time without penalty
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