Instead of a 24-week period, a business may use any period length of at least 8 weeks and no more than 24 weeks long. [12] Certified Public Accountants and accounting firms are not allowed to charge businesses to prepare their applications for PPP loans; instead, the lender is permitted to, and may, compensate them directly. Eighty-four percent of our PPP customers had fewer than 10 employees, and our average loan amount of $54,000 was the lowest among all of the participating large banks, showing our commitment to helping the smallest businesses in need. In the version for non-profit organizations, the questionnaire asks about the organization's endowments. Alternatively, the business may choose to divide by the average number of FTEs per month between January 1, 2020, and February 29, 2020. [al][79], PPP loan forgiveness is generally based on what the loan proceeds were spent on, to what extent the business maintained or rehired its employees, and to what extent it maintained the wages and hours of its employees. [1], The purpose of the Paycheck Protection Program and loan forgiveness is to provide economic relief to small businesses and certain other entities that have been adversely impacted by the COVID-19 pandemic. A seasonal business is eligible to apply for a PPP loan if it was in operation on February 15, 2020, or it was in operation for at least eight weeks between February 15, 2019, and June 30, 2019. [178][179], The report showed that, while the Small Business Administration had worked quickly to implement the PPP, the urgency caused confusion throughout the implementation of the PPP. [130], The Act restarted the period to apply for PPP loans, added $284.5 billion in funding for PPP loans, and it allowed certain entities to apply for a second draw of a PPP loan. to help small businesses and workers across the country recover from the devastating effects of COVID-19. For businesses whose banks are not processing PPP loans, you’ll need to find another lender. An applicant may choose to use its payroll costs for the previous 12 calendar months instead. If an employee is paid but not performing work, payroll costs are incurred based on the business' schedule, which is generally each day the employee would have ordinarily performed work. The American Bankers Association has urged the federal government to release the forgiveness rules urgently. The PPP is a first come, first serve program and when the money runs out, it’s over. 431 Canceled Debt – Is It Taxable or Not? The guidance addressed issues regarding the submission process; employee, independent contractor and sole proprietor compensation; non-payroll costs and payroll cycle calculations. [13] Allowable non-payroll costs include business payments of mortgage interest,[ac][ad][ae] other interest,[af] rent,[ag][ah] and utilities, such as electricity, gas, water, telephone, internet, and transportation utility fees assessed by state and local governments. For a home-based business, rent, interest, and utilities are forgiveable up to the prorated share of covered expenses that were deductible on the business' tax return in 2019. [174], The Small Business Administration requires 75% of a PPP loan be used for payroll costs, which is a rule not found in the law. We will continue to update our borrowers, application process, and FAQs as we learn more. The team is hard at work securing approvals through the SBA. You can find a, full list of Code 72 businesses, which fall under the hospitality and entertainment industries, here, Seasonal employers who operate no more than 7 months within a year or do not have more than a third of gross receipts within a 6-month period, Faith-based organizations with 150 or fewer employees, Housing cooperatives with less than 300 people. An entity is eligible for a second draw if all of the following are true. Paycheck Protection Program An SBA-backed loan that helps businesses keep their workforce employed during the Coronavirus (COVID-19) crisis. For many businesses, you’ll be able to work with your bank. The paycheck protection program – protecting paychecks! [bf][132], The Act stated that entities that received a PPP loan of less than $150,000, rather than $50,000, would be eligible to use a simplified one-page loan forgivess application. In order to be eligible for the Paycheck Protection Program, an applicant must be a small business, sole proprietor, independent contractor, self-employed person, 501(c)(3) nonprofit organization, 501(c)(19) veterans organization, or a tribal business. This is true even if the borrower requested no forgiveness at all of the loan. The safe harbor provision that loan forgiveness will not decrease if the business rehires employees and restores wage reductions by June 30 is extended to December 31. The Small Business Administration and its inspector general may review any PPP loan.[85]. Twenty-four weeks after the funds are disbursed, you can apply for forgiveness. If you have submitted your application, chances are you have been contacted by a member of the business banking team. If the money is spent on payroll and other approved expenses, the PPP loan can convert to a grant that doesn't have to be paid back. ** Opens on an external … [177], A lobbyist for the Independent Community Bankers of America has said that virtually all business owners have taken such a loan assuming it would be forgiven, but the rules are highly complex and all the rules have not yet been released for loans that have already been made. [142], At least 100 PPP loans were made to businesses without business names. For more information on PPP 2.0, including how to apply for a loan and loan forgiveness, check out our FREE PPP Resources Guide . [9] Rep. Dean Phillips (D MN) introduced the bill on May 26. It must also have had at least a 25% decrease in revenue for a calendar quarter in 2020 when compared to the corresponding calendar quarter in 2019. If you are a sole proprietor, an independent contractor, or a gig worker, here’s what you need to know, and what you’ll need to apply. [77][63][78] A business may apply for loan forgiveness at any time on or before the maturity date of the loan, including before the covered period ends in the case of a business that has expended all of the PPP loan proceeds for which forgiveness is requested. [s][12] In some cases, however, each affiliate of a company is allowed to apply and receive its own PPP loan. [82] Loan forgiveness will not decrease if the business is unable to return to its previous level of business activity due to compliance with requirements or guidance from the Department of Health and Human Services, the Centers for Disease Control, or the Occupational Safety and Health Administration between March 1 and December 31, involving COVID-19-related standards for worker safety or customer safety. [155], On April 23, the Small Business Administration released guidance stating that it is unlikely that a publicly traded business with substantial market value and access to capital markets would be eligible for a PPP loan. [74] In that case, owner-employee compensation are treated the same as any non-owner employee's compensation, and qualifies for PPP loan forgiveness for up to $46,154 of compensation for a 24-week covered period as well as additional amounts for retirement plan expenses, health benefits paid for the owner-employee and their family, and state unemployment taxes on their compensation. Remember, this is not official legal advice. They included Lakewood Church, a Houston megachurch led by televangelist Joel Osteen, which received $4.4 million; the Archdiocese of Galveston-Houston, which received about $4 million; and the Catholic Charities of the Archdiocese, which received about $4.5 million. Those who received a PPP loan before June 5 can still choose to have the 8 week period apply. The deferral period lasts until it is determined what your PPP loan forgiveness amount will be. Businesses with multiple locations that are in the hospitality and lodging industries would have a limit of $2 million for all locations. Utilities are allowable if service began prior to February 15, 2020. The funding can be used for payroll costs and other operational expenses, and the new bill expanded its use to include group health insurance benefits. The Paycheck Protection Program (PPP) loan is a type of SBA loan designed to provide funds to help small businesses impacted by COVID-19 to keep their workers on payroll. In order for a non-payroll cost to be eligible for loan forgiveness, the non-payroll cost must either be paid during the covered period or incurred during the period and paid by the next regular billing date, which is allowed to be after the covered period ends. The federal Paycheck Protection Program (PPP) reopens this month with an additional $284 billion that entrepreneurs can borrow to help keep their businesses afloat. [65], The Equal Credit Opportunity Act requires lenders to notify an applicant of a decision on the PPP loan application within 30 days[y] of the date the lender receives either a loan number or a response about the availability of funds from the Small Business Administration. Community Development Financial Institutions. Use this form to apply for the Paycheck Protection Program (PPP) with an eligible lender for a First Draw loan Revised 02-17-21 This form is to be completed by the authorized representative of the applicant … Take a look at our Paycheck Protection Program infographic for a visual showing what is the PPP, what you can use funds for, who can apply, and how to apply. Payroll costs include gross salary and wages, tips, vacation leave, sick leave, holiday pay, furlough pay, bonuses, severance pay, and other compensation paid to employees, up to $46,154 per employee. If the money is spent on payroll and other approved expenses, the PPP loan can convert to a grant that doesn't have to be paid back. These loans may be completely forgiven if spent on eligible expenses (mainly payroll) during a specific time period. The Paycheck Protection Program (PPP) is a $953-billion business loan program established by the 2020 US Federal government Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to help certain businesses, self-employed workers, sole proprietors, certain nonprofit organizations, and tribal businesses continue paying their workers. You must use the funds during your covered period in order to be eligible for any type of forgiveness. Decisions made by a private lenders may not be appealed. The alternative payroll covered period begins on the first day of the first pay period beginning after the date the loan proceeds were received. It must not have received a Shuttered Venue Operators grant. First, let’s define what an “employee” means under the Paycheck Protection Program. [180], In late October 2020, the Small Business Administration created a nine-page loan necessity questionnaire for entities that received PPP loans of $2 million or more. These costs are limited to $100,000 annualized per employee. For each new PPP loan, the Small Business Administration would pay each lender an amount equal to 3 percent of the first $350,000 plus 1% of the amount exceeding $350,000. Along with more stimulus checks, the new bill includes a second round of the Paycheck Protection Program (PPP). SBA Coronavirus Assistance Program Apply for a Paycheck Protection Loan Find out if you qualify in minutes. The Paycheck Protection Program allows entities to apply for low-interest private loans to pay for their payroll and certain other costs. [d][12][13], Applicants who operate as a sole proprietorship, an independent contractor, or an eligible self-employed individual must have been in operation on February 15, 2020. The information on this web page should not be relied upon as legal, tax, or financial advice. [122], The Prioritized Paycheck Protection Program Act would allow some businesses to be eligible for a second PPP loan. A business must file a petition to appeal with the Office of Hearings and Appeals by 30 days after a borrower's receipt of the Small Business Administration's final PPP loan review decision or 30 days after the lender notifies the business of the Small Business Administration's final PPP loan decision, whichever is earlier. A business that is in either the. This program creates a new type of loan that will be disbursed by the hundreds of Small Business Administration (SBA) partner banks across the … [85], For those businesses that received PPP loans early in the process, eligibility for applying for loan forgiveness began as early as May 27, 2020, eight weeks after the first distributions of PPP loan proceeds. All loan applicants, regardless of first- or second-draw status, can choose a covered period of from 8 to 24 weeks after you receive your loan. See How Much You Can Borrow** * Application begins January 12 2021 and ends at March 31, 2021. After receiving the questionnaire from the lender, the entity has ten business days to complete and return the questionnaire to the lender. [x][47][48], An applicant applies for a PPP loan directly with an eligible private lender, such as a federally insured bank, a federally insured credit union[49], Farm Credit System institution, or a Small Business Administration-approved lender. While PPP funding was available to small businesses when it was first launched through the CARES Act, many businesses were left in the dark due to complications the first bill presented. if your business falls under one of the following categories: Lobbying organizations or organizations involved in political activities, Businesses that employ household workers like housekeepers or nannies, Businesses that have defaulted on SBA or federal loans. These include life insurance, disability benefits, vision, and dental insurance. The business is unable to return to its previous level of business activity due to compliance with requirements or guidance from the. These uncertainties caused many small businesses to decide to return their loan proceeds rather than face these possible consequences. If the PPP loan forgiveness application was already sent to the Small Business Administration, the lender must request its withdrawal through the Paycheck Protection Platform, correct the error, and then resend. Apply now. Note: The deadline to apply for this round of PPP funding is March 31, 2021. [40], PPP loan proceeds may also be used for certain non-payroll costs. A business can receive loan forgiveness on all of its payroll costs. A business that received applied for a PPP loan before May 5 will not be subject to penalties for interpreting the 500-employee threshold for only counting its employees in the United States. Published Tue, Mar 9 2021 12:42 PM EST. The confusion added to the economic stress that employees were already experiencing from the pandemic. Of all loans, 74 percent were for $150,000 or less. [167], On June 25, 2020, the Government Accountability Office released its first bimonthly report of its oversight of the Paycheck Protection Program, as required by the Coronavirus Aid, Relief, and Economic Security Act. [90], The above owner-employee compensation limits do not apply if the individual owns less than 5% of the S corporation or C corporation. The smallest businesses can still apply for the Paycheck Protection Program. PPP loan proceeds may generally be used for payroll costs. [132], The Act also added to the types of allowable expenses of PPP loan proceeds. A business may also disregard wage reductions if it eliminated the wage reduction by June 30, 2020. [68][67], If a PPP loan application is incomplete, the Equal Credit Opportunity Act requires the lender to notify the applicant of the issue, and the lender must provide the applicant a period of time to make the application complete. The Paycheck Protection Program (PPP) is a federal relief program established by Congress and implemented by the U.S. Treasury Department and the Small Business Administration (SBA) with rules, requirements, protocols and processes that all participating lenders, including Bank of America… Starting April 3, 2020, small businesses and sole proprietorships can apply for and Published Tue, Mar 9 2021 12:42 PM EST. These loans may be completely forgiven if spent on eligible expenses (mainly payroll) during a specific time period. Applications will be available through March 31, 2021. full-time, seasonal, and part-time employees. [110], On July 4, 2020, S. 4116 was passed, extending the application deadline from June 30 to August 8, 2020. [129], On December 21, 2020, the House and the Senate passed the Consolidated Appropriations Act, 2021, which includes $284 billion in forgivable loans to small businesses via the Paycheck Protection Program. Eligibility requirements get a little more specific if you are trying to get a second PPP loan. [55][56], Loan applications are only accepted, and loans may only be made, through August 8, 2020. [79] For an owner-employee of a S corporation, health insurance benefits and retirement contributions are allowable costs but do count against the maximum amount of loan forgiveness for compensation above. [12][50], The Small Business Administration has a standard application form, although private lenders were allowed to use their own paper forms or electronic forms if they were substantially similar to the standard form. PPP Update for LLCs and Partnerships: The supplemental Interim Final Rule (Second Rule) to the Paycheck Protection Program has important implications for LLCs (filing taxes as a partnership) and partnerships that have applied, or are considering applying, for PPP loans. [117][119] Each local television, radio, and newspaper company would be eligible to apply separately, rather than together as an affiliated group, if they are otherwise eligible. [57], Making a false statement to obtain a PPP loan is a crime subject to possible imprisonment, fines, or both. Update, 1/14/21: The Paycheck Protection Program began a phased reopening for loan applications on January 11; the program will be open to all participating lenders and eligible borrowers, including both first and second draw applicants, on January 19.First draw applicants can access the loan application here. [12], Payroll costs include salaries, wages, commissions, cash tips, paid leave,[t] severance pay, clergy parsonage and housing allowance[21], and other compensation paid to employees. [77][80], One FTE is equal one worker who worked at least 40 hours per week. Carmen Reinicke @csreinicke . Womply has helped over 200,000 businesses get their PPP funding. All businesses would be able to use existing and new PPP loan proceeds for software, cloud computing costs, human resources costs, and accounting costs; out-of-pocket costs from property damage related to public disturbances in 2020; supplies that are essential to the business' operations and purchased based on contract made before February 15, 2020; personal protective equipment and other costs so the business can adhere to the federal government's health and safety recommendations for the coronavirus issued between March 1 and December 31, 2020. [74], The compensation of an owner-employee of an S corporation is limited to the amount of their 2019 cash compensation and employer retirement contributions on their behalf, but it cannot separately include health insurance contributions made on their behalf because these contributions are already included in their cash compensation.
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