The onset of COVID-19 has brought challenges for the entire economy, effecting business owners and employees alike. Thankfully, the Paycheck Protection Program (PPP) Loan has been allocated to businesses and sole proprietors who need support during COVID-19. The PPP specifically helps businesses keep their workforce employed during the crisis. Although the first round of the PPP was exhausted in only 13 days, a second round from the SBA with an additional $310 billion of funding was issued on 4/27. If you haven’t yet applied, do so now. Here are a few things to know about the program:
- Qualifications: You can apply for a loan if you are a small business that meets SBA’s size standards, sole proprietor, independent contractor, self-employed person, or a non-profit organization.
- Where to Obtain: When the funds are available, apply for a PPP loan through any of the 1,800 participating SBA approved lenders or through any participating federally insured depository institution, federally insured credit union, and Farm Credit System institution.
- Loan Forgiveness: Loans will be fully forgiven if used for eligible uses, including payroll costs, interest on mortgages, rent, or utilities. Additionally, loan payments will be deferred for six months with no charge of fees. Forgiveness is contingent on the employer maintaining or quickly rehiring employees. If wages or full-time employee headcounts decline, forgiveness will be reduced.
It is important to note that there are specific parameters around forgiveness. For example, you must use 75% of the funding in the first 8 weeks of issuance to potentially qualify for forgiveness. There are key ways to track this accounting to so be sure to ask a professional for resources available. For additional program information, please visit the official SBA website: https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program-ppp. We also offer online resources and blogs that can help you navigate your finances during the crisis. Visit us at bakersmithbookkeeping.com or call us at 303-792-0655 for more information.