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Congress recently passed a relief bill known as the Coronavirus Aid, Relief, and Economic Security Act, or simply, the “CARES Act”. The CARES Act has several provisions that may help small businesses.  The bill aims to assist Americans over for the next four to six weeks given COVID-19's widespread disruption of the economy.  While far from exclusive, the $2.2 trillion Act included two main categories of economic stimulus: tax deferral and loans.   

The CARES Act created the Paycheck Protection Plan (“PPP”) and the initial round of funding of loans has depleted. Small business applications have proven to be popular but confusing.  To provide further relief, Congress has recently provided an additional $310 billion in funds that will be available this week.  It is expected that this round of funding will go quickly, so time is of the essence to submit an application on behalf of your small business. 

OVERVIEW OF THE PPP

• Who can apply?
  • Any business that has 500 or fewer employees, and
  • Open on or before February 15, 2020

• What is the loan for?
  • Expenses related to salaries, wages, health insurance premiums, payment of interest on business mortgage obligations, rent, and utilities, among other charges for your business.

• Other details:
  • It is forgivable, in whole, or in part, WITH caveats.
  • The Small Business Administration is supposed to offer additional guidance on these rules.

• The loan must be spent during an eight-week time period for it to be forgiven.

• 75% must be used on payroll costs (salary, wages, health insurance, retirement contributions).

• There can be no reduction in compensation of any employee making less than $100K by any more than 25% otherwise you will lose some of your loan forgiveness.

• The cap on the loans is $10 million and a business can apply for 2.5 times its payroll.The time period to determine payroll expenses can be 2019’s expenses or 12 months prior to your application.
  • If your business has not been around for that long, then all your prior months’ expenses need to be included.

• If your PPP loan is not forgiven, the term is 1% interest and it must be paid back within 2 years.

This is far from an exhaustive list of the PPP or its details.  The loan program is very nuanced. Given its demand, we expect that only accurate and timely applications will be accepted.  Tressler LLP can assist your small business during this difficult time and we are available to help you develop a plan or policy.  I am available to help evaluate the PPP, the CARES ACT or otherwise develop client-based goals and implement solutions for your business (even on a remote basis).   

Feel free to contact me for a complimentary consultation at momalley@tresslerllp.com or by phone at (312) 627-4052.