I found this thread on the "Paycheck Protection Program" very useful. Essentially, the Federal Government is guaranteeing forgivable SBA loans that can cover payroll, rent and utilities for small businesses! This effectively turns the loan into a grant so long as the business keeps up its payroll throughout the Covid-19 crisis. If you find this useful, its just a summary of what Jeff has posted on his twitter page @CPAPlanner, give him a follow!
For those that want to dig into the rules themselves, you can find the Final Regulations on the Treasury website here.
- This is roughly $350 Billion dollars distributed through existing SBA infrastructure. A lot of due diligence requirements have been shed, so as he describes, it is essentially an honor system.
- Section 2 goes over eligibility. The business must be under 500 employees, but it can't be a "household employer" (such as a nanny) or an illegal business (so, keep that under wraps, y'all).
- This does not cover payroll in excess of $100,000. An arbitrary number that ensures that people aren't just lining their own pockets with inflated salaries. Employees with salary over $100,000 are still counted, but their compensation that exceeds the limit is not.
- IMPORTANTLY: You can only apply once! If you want to access this, write an application for the largest amount you might need. You can't come back to this watering hole.
- ACT FAST! It's first come first serve. Will there be more later? Call your congressmen.
- You must certify that the loan was necessary. It's free money, but only for those who need it. It's still basically the honor system, but Americans love following rules, and the punishment is severe if you don't.
- If someone tries to charge you to hep you apply - that is illegal! Agents may not charge the borrower, or keep any loan proceeds. If someone offers to help, make sure they are not scamming you for money.
This is a great program meant to keep small businesses afloat during what is sure to be a tough economic time. Importantly, this protects those who protect their employees payrolls. If you have a small business, or know and love a small business, look into this ASAP. The SBA and your local SBA lender has more information on how to apply.