The Paycheck Protection Program: What This Means for Your Small Business
On March 16th 2020, our country began a 15-day plan to slow the spread of COVID-19. Five weeks after our President announced these measures, social distancing orders remain in place and questions remain. When will we begin to see a large shift in numbers? Will businesses large and small be able to handle the hardships placed in their path?
This world-wide pandemic has brought not just our country – but our entire globe – to a spinning halt.
“I wish there was an easy solution to these issues but there isn’t. My ask is to do the best you can. I also recommend that you not fall into the temptation of having every waking hour be a work from home hour just because it can be.”
-Sam King – CEO of VeraCode, a cybersecurity company
Hope on the horizon?
Approved by the Senate, The Paycheck Protection Program is a federal relief program designed to provide small businesses with forgivable loans to help workers remain employed during the COVID-19 crisis. Unfortunately, this sliver of hope ran out of the allotted 349 billion dollars in just 13 short days. Small businesses were left questioning how they would stay afloat.
However, the Senate approved additional funding, which will provide the Paycheck Protection Program an extra $310 billion. And by the time you read this, things may have changed or evolved even more… But this is the status as of the end of April.
The Paycheck Protection Program. What You Need to Know:
Any small business can apply if you meet the following criteria:
- 501(c)(3) non-profit organization, 501(c)(19) veterans organization, or Tribal business concern (sec. 31(b)(2)(C) of the Small Business Act) with the greater of: 500 employees, or that meets the SBA industry size standard if more than 500
- Any business with a NAICS Code that begins with 72 (Accommodations and Food Services) that has more than one physical location and employs less than 500 per location
- Sole proprietors, independent contractors, and self-employed persons
How can your Small Business qualify?
Your business can apply for the Paycheck Protection Program if:
- Your business has 500 employees or less
- Franchises that are small businesses in the hotel and food service industries may be considered
- A taxpayer identification number (TIN) is required
Financially, How Much Can Your Small Business Expect?
According to The Paycheck Protection Program, your small business will receive 2.5 times the average monthly payroll costs for the previous calendar year, with a cap off amount of ten million dollars.
Repayment: What Your Business Needs To Know
The PPP has a fixed interest rate of 1%, no collateral or guarantor with no prepayment penalties or fees, but is due in two years. Also, loan payments are deferred for six months. If you are looking for loan forgiveness, your small business will need to submit a request to the lender.
Steps to take if you think you qualify:
- Contact your bank or lender – these programs are new, but most lenders are now caught up and taking applications digitally, so they should be able to answer your questions.
- Contact your payroll company – some payroll companies, like Gusto, have ready-made reports for clients to download instantly and submit with their application.
Physical Distancing and Quarantine Measures Work
Charting new waters can be intimidating, especially when you are running a business concurrently with revisions to daily operations to stay afloat in this transforming climate.
We’re all in this together and we each have something we can share.
We’re happy to schedule time for brainstorming with you. As we all respond to the challenges faced during this time, know that our team is here to support you any way we can.
The Virtual Team @ Marketecs