DRDA continues to provide you information as quickly as we can related to any tax law changes, as well as financial aid and loan opportunities as a result of the COVID-19 crisis. As you can imagine, this is a rapidly changing environment and we will continue to disseminate information as it is made available to us.
On March 27th 2020, President Trump enacted the Coronavirus Aid, Relief, and Economic Security (CARES) Act to Help small businesses keep workers employed through a program known as the Paycheck Protection Program (PPP). Which allowed banks to issue SBA 100% federally guaranteed loans to small businesses that can attest to suffering economic hardship as a result of the COVID-19 crisis. Importantly, these PPP loans may be forgiven if borrowers maintain their payrolls during the crisis or restore their payroll afterward.
Yesterday April 23, 2020 Congress approved an additional $310 billion in Funding to replenish the PPP Program which has run out of money. Congress had allotted an initial $349 billion in the last relief bill, a $2.2 trillion package enacted on March 27, only to see the funds run dry shortly afterward due to the rush of businesses seeking to tap the benefits.
Banks will start processing application Monday April 27, 2020. We anticipate the money to move very quickly. We suggest to those applying for the PPP, to do so as soon as possible, and be ready to submit their applications immediately as the program becomes available.
Here is a link to a small business guide published yesterday by the U.S Chamber of Commerce. Please take the time to read this memo, and if you believe your business qualifies (if you need help in that determination, please let us know), then you need to contact your banker to start the process. Please keep in mind, these loans are moving very fast and they are being created as a “first come, first served” priority list for applicants. This will typically be a bank process, not an accounting process, so submitting a loan application through your bank will be of the utmost importance.
The last twelve (12) months payroll information will be needed. It is our understanding at this time, that payroll will include wages, employer paid payroll taxes, health insurance premiums and retirement expense (i.e. 401(k) match).
As stated previously, for the PPP loan to be forgiven your business will have to prove that it retained and continued to pay employees. The rules are still evolving regarding the employee retention provision but understand that employee retention is paramount to having this loan forgiven.
The administration’s PPP program guidelines can be found at www.treasury.gov, and the U.S. Small Business Administration’s search tool to find a bank that offers PPP loans can be found at www.sba.gov/paycheckprotection/find.
We hope that you are well, and please stay safe. Please don’t hesitate to contact us with any questions you may have.
