THE PAYCHECK PROTECTION PROGRAM (PPP)
The Paycheck Protection Program (PPP), is a loan designed to provide access to cash so that businesses can keep paying their employees and other expenses such as health insurance premiums, rent or mortgage payments and utilities. This important financial relief will help small businesses return to being fully operational quicker once conditions improve. 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.
This program is for any small business with less than 500 employees (including sole proprietorships, independent contractors and self-employed persons), private non-profit organization or 501(c)(19) veterans organizations affected by coronavirus/COVID-19.
Businesses in certain industries may have more than 500 employees if they meet the SBA’s size standards for those industries. Small businesses in the hospitality and food industry with more than one location could also be eligible if their individual locations employ less than 500 workers.
As per the SBA, the loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll). Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees.
Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.
This loan has a maturity of 2 years and an interest rate of 1%.
The loans under the “paycheck protection loans” are generally limited to the lesser of:
- the sum of 1) average monthly “payroll costs” for the 1 year period ending on the date the loan was made (an alternative calculation is available for seasonal employers) multiplied by 2.5, and 2) any disaster loan taken out after January 31, 2020 that has been refinanced into a paycheck protection loan, and
- $10 million.
Payroll costs do not include, however the compensation of any individual employee in excess of an annual salary of $100,000,
Applications under this program are submitted through the borrower’s banks.
Economic Injury Disaster Loan Emergency Advance
The Small Business Administration’s (SBA) EIDL- disaster loans are the primary form of Federal assistance provided for the repair and rebuilding of non-farm, private sector disaster losses. The Economic Injury Disaster Loan Program (EIDL) can provide financial assistance to small businesses or private, non-profit organizations that suffer substantial economic injury as a result of the declared disaster.
Small business owners in all U.S. states, Washington D.C., and territories are eligible to apply for an Economic Injury Disaster Loan advance of up to $10,000. This advance will provide economic relief to businesses that are currently experiencing a temporary loss of revenue. According to the SBA, Funds will be made available following a successful application. This loan advance will not have to be repaid.
SBA’s this program is for any small business with less than 500 employees (including sole proprietorships, independent contractors and self-employed persons), private non-profit organization or 501(c)(19) veterans organizations affected by COVID-19. Businesses in certain industries may have more than 500 employees if they meet the SBA’s size standards for those industries. The Economic Injury Disaster Loan advance funds will be made available within days of a successful application, and this loan advance will not have to be repaid.
This application is directly submitted to SBA.
Bhatia & Co., Inc 