Paycheck Protection Program-COVID-19 Loan Program Funded by Small Business Administration
To our Clients and Friends,
We have received many follow-up questions to our latest message about the Paycheck Protection Program, the COVID 19 loan program funded by the Small Business Administration (“the PPP”).
We are providing this update on the PPP to all of our clients recognizing that this information may not be relevant to those of you outside of business interests (i.e. our individual tax clients). However, given the significance of this communication, we wanted to send it to as broad a list as possible to ensure that all affected would be notified. Please forgive us for clogging your in-box if this information is not relevant to you.
Late yesterday, the Department of Treasury released information and the initial application for the Paycheck Protection Program (“PPP”). The application is here: Paycheck Protection Program application and supplemental information is here: accompanying borrower guide.
Your banking partner/lender (the means by which you will access these funds) will require additional information and documentation from you as part of their process. As stated in prior correspondence, you should contact your banker/lender as soon as possible to inform them of your interest in applying for the PPP loans.
The PPP is generally available to all businesses or 501(c)(3) non-profits with less than 500 employees.
As a reminder and update, under this program:
- You may borrow up to 2.5 times your average monthly payroll cost,
- “Payroll costs” include direct salaries and wages (up to $100,000 of annual salary/employee) as well as benefit costs (health insurance premiums, retirement contributions, etc.),
- Payments are not required for six months, and
- The loan is eligible for 100% forgiveness if used to cover a) payroll costs and b)interest on mortgage obligations, rent or utilities on agreements in place prior to February 15, 2020 during c) the eight-week period following origination of the loan.
- Loan forgiveness is reduced if there is a reduction in employee head count or amounts paid during the eight-week period following origination of the loan.
Borrowers will need to certify that:
- Current economic conditions require assistance,
- Funds will be used to retain workers and meet payroll or make mortgage, rent and utility payments,
- And other requirements that your banker/lender may request.
However, PPP loans do not require collateral, personal guarantee or the ability to obtain funding from other sources.
Finally as a point of clarification and reminder, businesses who receive funding under the PPP are not eligible for benefits under the Employee Retention Credit of the CARES Act (the relief from employer’s portion of social security tax available to businesses who have had their business suspended by official government order or had in excess of a 50% decline in revenue).
Kimble is available to help with these matters. Please contact us if you have questions about how this program or other aspects of the CARES Act affects your business.
Look for further updates as information becomes available.
Thank you for your continued confidence in us during these uncertain times. Be safe and stay well.