The Paycheck Protection Program (“PPP”) authorizes up to $349 billion in forgivable loans to small businesses to pay their employees during the COVID-19 crisis.
How much can a small business borrow under the PPP?
Loans can be for up to two months of your average monthly Payroll Costs from the last year plus an additional 25% of that amount. That amount is subject to a $10 million cap.
What are the repayment conditions?
Loan forgiveness. If the loan proceeds are used for certain expenses, that portion of the loan will be forgiven and will not need to be paid back.
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*; and
- Employee and compensation levels are maintained. Your loan forgiveness will be reduced if you decrease your full-time employee headcount.
*not more than 25% of the forgiven amount may be for non-payroll costs.
Payroll costs are capped at $100,000 on an annualized basis for each employee.
Non-forgiven loans. For non-forgiven loans, loan payments will be deferred for 6 months. The loan will be due in 2 years. Interest is charged at 0.50% fixed rate.
Who can get a loan?
All businesses – including nonprofits, veterans organizations, Tribal business concerns, sole proprietorships, self-employed individuals, and independent contractors – with 500 or fewer employees can apply.
Businesses in certain industries can have more than 500 employees if they meet applicable SBA employee-based size standards for those industries.
How do I apply for a loan?
You will need to complete the Paycheck Protection Program loan application and submit the application with the required documentation to an approved lender that is available to process your application by June 30, 2020.
You will need to provide your lender with payroll documentation.
What can the loans be used for?
You should use the proceeds from these loans on your:
- Payroll costs, including benefits;
- Interest on mortgage obligations, incurred before February 15, 2020;
- Rent, under lease agreements in force before February 15, 2020; and
- Utilities, for which service began before February 15, 2020.
The post Paycheck Protection Program for Small Biz appeared first on IRS Office Near Me.
