PPP Loan - Act Fast
Why you need to apply for the PPP Loan, and do it fast.
Coronavirus hit the world hard. These are difficult times for everyone. But especially for small businesses. They have a thin profit margin. So every sale and every day counts. For many, the first few years are just spent meeting costs.
In a climate like this where people are at home and choosing not to buy products, times are hard. So, what can you do? If you want to push through, you need to know your options. That includes the government offered loans and plans. One such plan is the PPP loan.
WHAT IS THE PPP LOAN?
The Payment Protection Program or PPP is a loan that's been in the news a lot. Which means there's a lot of buzz and misinformation out there. Here are a few key facts you should know.
You get the loan through the SBA Department of the US Government and the maximum loan amount you can receive is 10 million dollars. However, the maximum amount you can request is 2.5x your average monthly payroll from the last year.
All or a part of this loan can be excused and there are conditions to getting your PPP loan forgiven. Forgiveness is a possibility, not a guarantee and that goes for both complete and partial forgiveness. But the funding deadline (June 30th, 2020) is coming up fast, so you need to apply.
WHAT DO YOU NEED TO KNOW TO GET YOUR PPP LOAN FORGIVEN?
You need to spend 60 percent of your loan on payroll costs within the newly updated twenty-four weeks of getting the money. If you do that, you can get 100 percent of your loan forgiven. That means you get to keep all your workers and existing systems working. You do it right, and you've bought yourself an extra three to four months.
Payroll costs cover three things.
- Worker pay below $100,000 per person
- Paid sick leave
- Group health insurance
You can use the remaining 40 percent on:
● Mortgage interest from before February 15, 2020
● Rent and utility bills
● Interest on other loans from before February 15, 2020
ARE ANY PAYROLL COSTS EXCLUDED?
Yes, some payroll costs cannot be covered as part of the loan. For example:
- Wages for employees who are not US residents
- Salaries for people that exceed $100,000
- Federal tax as calculated between February 15, 2020, and June 30, 2020
- Income taxes
- Sick leave qualified under the Families First Corona Virus Response Act
- Payroll reimbursements
- Benefits such as life insurance and short-term disability
WHAT IF YOUR COMPLETE LOAN IS NOT FORGIVEN?
There is no guarantee your complete loan will be waived off. You may have to pay a portion or all of the loan off. If you have to pay off a portion of the loan, you still have options.
The PPP loan has a 1 percent interest rate and a maturity of two years. You can ask to defer payment for another six months. That may be enough to keep things running till the end of the pandemic and may off your debts in the long-term.
Yes, it is possible you will not have to pay off your PPP loan. But, it is equally possible you might have to. Make sure you prepare to face the worst.
WHO IS ELIGIBLE FOR THE LOAN?
You are eligible if your business was running before February 15, 2020, and you fall under any of the following categories.
- Small businesses that have less than 500 employees
- Sole proprietors, independent contractors, and self-employed individuals
- Hospitality and foodservice companies with less than 500 employees per venue
- Nonprofits under Section 501 C3 and veteran services under Section 501 C19
WHY YOU NEED TO APPLY TODAY
The total fund allocated to the PPP loan is $349 billion. It covers any business which has less than 500 employees. The money covers any expenses of running your business. And you can apply for an amount around 2.5 times your average monthly payroll. There is still plenty of money left, but time is running out before the June 30th deadline.
ARE FUNDS STILL AVAILABLE?
According to sources, there is still $126 billion in the fund. This is your opportunity to get the money you need today.
WHAT IF YOU HAVE ALREADY FIRED EMPLOYEES?
If you've laid-off employees to cut costs, you can still apply for the loan. You can rehire them after your loan approval. However, you should not fire any more workers between now and then. Since you'll be submitting bookkeeping records from the past year, keep this in mind when listing your employee count.
The CARES act has a clause for rehiring when calculating your forgiven loan. For maximum loan forgiveness, it allows rehiring before December 31, 2020.
CAN CLOSED BUSINESSES RECEIVE AID?
If your business is closed because of shelter-in-place orders, you can still apply for the loan. You don't need a store to qualify for the loan. You just need employees on your payroll.
Once you receive funds, you can use them to pay your workers and rent on your properties. The process works the same regardless of whether the store is running.
WHERE TO SUBMIT YOUR APPLICATION?
Banks are receiving loan applications in bulk. In fact, some bigger banks may even refuse to accept your PPP application. To maximize your chances, it is better to file your claim with a small, local bank. If you do not have a banking relationship, sites like Kabbage or Square are accepting and approving PPP applications.
To conclude, get your documents together and apply for the loan today. There is no time to waste. This loan is only available for a short time. You may receive partial or complete forgiveness for this loan. In which case, you will never have to pay it back.
If you have any questions, please reach out to the experts at Hall Accounting Company at accounting@hallacctco.com.
JUNE AND JULY IMPORTANT DEADLINES
6/30/20
Individual and C-Corp Preparation Documents Due
We will need all documents in by this date
7/15/20
Individual and C-Corp Tax Return Due
IRS Deadline for Tax Returns Due (Form 1040 and 1120), must file extension if proceeding beyond this date
7/15/20
Deadline for SEP-IRA or Solo 401K Funding
Deadline for SEP-IRA or Solo 401K Funding for Tax Year 2019
7/15/20
Deadline for SIMPLE-IRA Establishment
Deadline for Self-Employed or Small Employers to Establish a SIMPLE-IRA
7/15/20
Estimated 1st Quarterly Tax Payment for 2020 Tax Year Due
IRS Deadline for Quarterly Estimated Payments for 2020 (Form 1040-ES)
7/15/20
Estimated 2nd Quarterly Tax Payment for 2020 Tax Year Due
IRS Deadline for Quarterly Estimated Payments for 2020 (Form 1040-ES)
OTHER FUTURE IMPORTANT DEADLINES
9/15/20
Partnership and S-Corp Tax Returns Due, if extended
IRS Deadline for Tax Returns Due (Form 1065 and 1120-S), must file extension if proceeding beyond this date
9/15/20
Estimated Quarterly Tax Payment for 2020 Tax Year Due
IRS Deadline for Quarterly Estimated Payments for 2020 (Form 1040-ES)
10/15/20
Individual and C-Corp Tax Return Due, if extended
Deadline for SEP-IRA or Solo 401K Funding for Tax Year 2018
10/15/20
Deadline for SEP-IRA or Solo 401K Funding, if extended
Deadline for SEP-IRA or Solo 401K Funding for Tax Year 2019, if extended
1/15/21
Estimated Quarterly Tax Payment for 2020 Tax Year Due
IRS Deadline for Quarterly Estimated Payments for 2020 (Form 1040-ES)