A Survivor’s Guide to the Paycheck Protection Program (PPP)

As part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act The Paycheck Protection Program was created. This loan program contains nearly $350-billion intended to provide American small businesses through 100 percent federally guaranteed loans to keep employees working. This legislation is complicated and at times confusing however it’s a great benefit for small business. Having just gone through the application process, we are uniquely positioned to perhaps answer questions or concerns you might in advance of taking advantage of this program.

The Paycheck Protection Program Resources

The Paycheck Protection Program (PPP) – Survivor Details.

The Paycheck Protection Program (“PPP”) is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities.

  • Intent is to retain small business employees. The loan amounts will be forgiven as long as:
    • The loan proceeds are used to cover payroll costs, and most mortgage interest, rent and utility costs over the 8 week period after the loan is made
    • Employee and compensation levels are maintained throughout that 8 week period

Eligibility:

  • It’s available to any business or nonprofit that has less than 500 employees
  • You will have to provide proof of funds (Payroll information) that will show your 2.5 times of your monthly payroll expense

The Application Process:

  • This is a first come first serve situation, so act fast
  • The first thing you want to do is reach out to your primary banking institution
  • It varies on the institution, bigger banks will require you to submit everything online, smaller banking institutions may require you to do things via email
  • We gave our banker the last 5 quarterly payroll information and submitted it to the bank
  • Reach out to your payroll processor to receive payroll calculations from them
  • ADP provided us with a certification for a co-managed company

Things to know:

  • Your loan amount is capped at 2.5 time your monthly payroll expense or 10 million whichever is less
  • You apply directly through your payroll bank
  • Payments can be deferred 6-12 months after the loan has been distributed
  • Your bank institution will require you to prove you 2.5 times payroll
  • There is a two page application, some banks are asking for W2, Mostly it will require your quarterly filing information
  • Employees cannot be laid off, if they are the loan will not be forgiven. The banking institution will go over these general rules with you as they may differ from institution
  • Once approved you can decline the funds if need be, it won’t operate like a line of credit, you will receive all the funds in one deposit
  • Keep records of how this payroll money is spent and bank statements. It should be monitored closely. Tax returns, payroll records and pay rates will be documented and need to be transparent to the bank

Alternative options:

  • Banks are free to cap their loans, Wells Fargo has capped their loans at 10 million
  • If you are running into roadblocks, go to other banking institutions or reaching out to smaller banks or credit unions
  • There are other loans within the CARES Act for businesses and individuals