The SBA has been developing new and revising past guidelines as companies begin to receive relief funding and Congress grants additional relief funding. One program of interest we have used for our clients is the…
Payroll Protection Program
- The loan amount is based on your monthly payroll multiplied by 2.5.
- Part of the loan debt may be forgiven, to the extent the proceeds are used for “eligible expenses, including:
- Payroll – salary, wages, vacation, or sick leave – for US citizens
- Medical/Health Insurance,
- Interest on real property mortgages and auto loans (for loans in place before 2/15/20),
- Rent (for leases in place before 2/15/2020),
- Utilities (for accounts in place before 2/15/2020)
- You will have to start to make monthly payments to repay any part of the loan that is not forgiven six months after funding, plus 1% interest per year, all unforgiven sum must be repaid within 2 years.
- Lenders make NO promise or guarantee that all or any part of the Loan will be forgiven:
- The SBA has NOT provided definite guidelines for forgiveness (they are expected May 15th )
- Forgiveness may be for the full amount of the loan, part of the loan – or none of the loan
- Guidelines available include:
- No more than 25% of the total loan amount can be used for mortgage interest payments, rent payments, and utilities
- At least 75% of the total loan amount must be used for payroll and related items, AND:
- You must maintain the number of employees on payroll
- You must make an effort to rehire any laid off of furloughed employees
- You maintain each employee at, at least, 75% of the usual salary for each employee
- Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.
If you have any interest in a PPP loan, we have a full two-page summary of the guidelines available along with an example of how the loan may be used. Please let us know and we will send it to you!