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Paycheck Protection Program – What You Need To Know!


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.

Who qualifies?

Small businesses with fewer than 500 employees that were in operation on or before February 15, 2020. These include S Corporations, C Corporations, LLCs, sole proprietorships, independent contractors, certain nonprofits, and veteran organizations. When obtaining the PPP loan, borrowers must certify that COVID-19 has affected their business. If your business does not qualify for PPP loan, then consider the SBA Economic Injury Disaster Loans (EIDL), which will be a topic for a future article.

When can you apply?

April 3, 2020 - small businesses and sole proprietorships. April 10, 2020 - independent contractors and those who are self-employed.

We encourage you to apply as quickly as you can because there is a funding cap. You can borrow up to $10 million; however the loan amount will be based on 2.5 times your average monthly payroll costs. The monthly average payroll is calculated based on the prior 12 months of payroll. For example: if your monthly average payroll is $40,000, then you would qualify for a $100,000 PPP loan. The application can be found here - PPP application form.

What is included in monthly payroll costs?

Salary, wages, commissions, tips, vacation, sick, parental, family and medical leave, retirement benefits, group health premiums, state and local taxes assessed on wages. It does not include federal payroll taxes or the costs for wages in excess of $100,000.

What can this loan be used for?

Payroll, rent, mortgage payments, and utilities.

What is the interest rate?

0.5% fixed interest rate.

When does the loan have to be repaid?

The loan term specified by treasury guidance is 2 years. Loan payments will be deferred for the first 6 months and there is no pre-payment penalty.

Can this loan be forgiven?

Yes! For more information, please visit www.treasury.gov.

About the Author - Galit Shkurenko recently joined ECS Financial Services, Inc. as an Accounting Supervisor. Galit has more than 12 years of experience in public accounting and has provided audit, review, compilation and accounting services in a variety of industries including manufacturing, distribution and healthcare organizations, HUD multifamily housing, employee benefit plans, not-for-profit, and others. Galit received her Bachelor of Science degree in Accounting and Finance from DePaul University in 2007. In her free time, Galit enjoys outdoor activities, home improvement projects, but mostly catching up with her family and friends.

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