The Paycheck Protection Program (PPP) established by the U.S. Government as part of the CARES Act is designed to help businesses during the COVID-19 pandemic.
For businesses who are part of the Paycheck Protection Program, there are a few tips and guidelines to know and understand:
- Your bank gives the final recommendation on how much of the loan is forgiven. Be sure you understand their reporting requirements for forgiveness of the loan.
- The SBA forgiveness rules are not finalized as of this date. Further guidelines should be available in the next few days.
- What we do know is that at least 75% of the loan must be used for payroll expenses. This is gross payroll (with exceptions for employees earning over $100K yearly), state unemployment tax, health insurance premiums and retirement plan payments.
- There is a second requirement for payroll and that is with full-time equivalent employees. This means that certain levels of employment must be maintained to get full forgiveness.
- If you received the Economic Injury Disaster Loan (EIDL) you cannot use these funds for the same expenses as the PPP.
- The remaining 25% of the loan can be used for rent, mortgage interest, and utilities which includes telephone and internet service. The rental agreement must be in place on or before February 15, 2020.
For more information, contact the experts at David Mills, CPA, LLC.