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In the wake of COVID-19, the government unveiled the Payroll Protection Program. The Paycheck Protection Program authorized up to $349 billion in forgivable loans for small businesses to be able to pay employees during the current pandemic. Before we dive into what the program entails for businesses who are eligible, we would like to remind you that, like any other rapidly-changing piece of legislation, the situation is fluid. For the most up to date information on the program and any additions, we encourage you to visit the Treasury Department page here

What Is the Payroll Protection Program (PPP)?

These loans are forgivable by the United States government and can be used to cover payroll costs and most rent, mortgage interest and utility costs over an 8-week period. However, the loans require that you maintain employee and compensation levels. Payroll costs cannot be higher than $100,000 per employee per year. Loan payments will be deferred for 6 months. Thanks to an expansion of the CARES Act, small businesses, sole proprietorships, independent contractors and self-employed individuals can all apply for and receive loans through SBA lenders.

The Application Process

If you meet the requirements listed on the website, you can complete the Payroll Protection Program application (click here) and submit all required documentation to an approved SBA lender by June 30, 2020. However, so many businesses have applied that it is essential you apply as soon as possible. You can request funds to cover up to two months of average monthly payroll costs from the last year plus 25% more.

Will My Loan Be Forgiven?

If you use the Payroll Protection Program loan for anything other than payroll, mortgage interest, rent or utilities, you will owe money when the loan is due. You will also be charged for the loan if you fail to maintain your staff and payroll. What does that mean?

  • If your full-time employee headcount is lowered, your loan forgiveness will decrease
  • If you decrease salaries and wages by over 25% for any employee that made less than $100,000 annually in 2019, your forgiveness will be reduced
  • If you do not re-hire your full-time employees and salary levels before June 30, 2020, you will not receive forgiveness

Payroll Protection Program loans are due in 2 years at a 1.00% fixed rate interest rate. All payments have been deferred for 6 months, but interest will accrue over that period.

Rubino & Company Can Help Keep Your Company Stable During Hard Times

Since 1980, Rubino & Company has provided skilled consulting services to businesses of every size throughout the country. To learn more about our business and nonprofit services, please call us today at (301) 564-3636.

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