Below is a summation of the details of the Paycheck Protection Loan (PPL). We provide this information for that purpose only and we recommend that all clients check with their tax advisor and or legal counsel with regards to specifics of this program. We STRONGLY encourage you to act on this immediately as the demand will be unprecedented. Time is your enemy - contact your local SBA lender today - many many banks are SBA certified and likely the bank you do business at. Act NOW!
In general, any business (including sole proprietors) or non-profit organization may qualify if they meet the following:
i.) was in operation on 2/15/2020, and
ii.) has fewer than 500 employees, or
iii.) has more than 500 employees, but has an NAICS code beginning
with 72 and has fewer than 500 employees per physical location (generally hotels and hospitality businesses)
Loan Purpose and Details:
The maximum loan amount is the lesser of :
i.) $10 million, or
ii.) 2.5x average monthly payroll expenses for the preceding 12
months. Essentially 2.5 months of payroll expenses. If the business is a seasonal employer, the amount will be 2.5x the average monthly payroll expense for March, April, May, and June of 2019. If the business has been in operation for less than 12 months, the amount will be 2.5x the average monthly payroll expense for January and February of 2020.
Note – any salary/compensation amount greater than $100,000 annually for a single employee is excluded from this calculation
Permitted uses of funds include:
i.) Payroll costs
ii.) Costs related to the continuation of group health care benefits
iii.) Payments of interest (not principal) on debt that was in place
10 years maximum
PPL loans will be unsecured
Personal guaranties are not required
There is no requirement that borrowers be unable to get financing elsewhere or “credit elsewhere test”.
Principal and interest payments will be deferred for at least six months, though borrowers may pre-pay the loan at any time without penalty.
A portion of the loan used for eligible expenses will be forgiven. The amount forgiven will be the following expenses paid in the 8 weeks following the loan origination date:
i.) Payroll costs
ii.) Interest (not principal) on a real estate loan that was in place
iii.) Rent payments
iv.) Utility payments
The amount of loan forgiveness will be reduced if the borrower lays off employees or significantly reduces salaries.
The formula determining the amount of reduction is generally summarized below:
i.) If the borrower has fewer full-time equivalent employees (“FTEs”) on average, per pay period, between 2/15/2020 and 6/30/2020 compared to the same period in 2019, the loan forgiveness amount is decreased by the percentage of reduction in FTEs. The borrower can also choose to have their number of FTEs for 2/15/2020 – 6/30/2020 compared to 1/1/2020 – 2/29/2020, and that percentage change can instead be used to determine the amount of the reduction, if any.
ii.) If any employee’s salary has been reduced by 25% or more, the dollar amount of the decrease in excess of 25% will be deducted from the loan forgiveness amount. This will not apply to any employee who earned more than $100,000 on an annualized basis for at least one pay period in 2019.
iii.) If the borrower has made layoffs or salary reductions but restores the FTE count and salary to the prior levels (per the formulas above) by 6/30/2020, there will be no reduction in the amount of loan forgiveness.
Borrowers must make the following “good faith certifications”:
i.) “that the uncertainty of current economic conditions makes necessary the loan request to support the ongoing operations of the eligible recipient”
ii.) “acknowledging that funds will be used to retain workers and maintain payroll or make mortgage payments, lease payments, and utility payments”
iii.) “that the eligible recipient does not have an application pending for a loan under this subsection for the same purpose and duplicative of amounts applied for or received under a covered loan”
iv.) “During the period beginning on February 15, 2020 and ending on December 31, 2020, that the eligible recipient has not received amounts under this subsection for the same purpose and duplicative of amounts applied for or received under a covered loan”
Businesses applying for PPL loans will need to submit:
i.) Income statement for the prior twelve months specifically breaking out payroll expense on a monthly basis
ii.) Payroll tax filings reported to the IRS (Forms 1099-MISC)
iii.) Proof of existence before 2/15/2020 – such as articles of
iv.) Other documents as required by the SBA (to be determined)
In evaluating the eligibility of a borrower, a lender shall consider whether the borrower:
i.) Was in operation on 2/15/2020; and
ii.) Had employees for whom the borrower paid salaries and payroll
iii.) Paid independent contractors, as reported on a Form 1099-MISC.
This detail is provided for informational purposes only. Please consult your tax advisor and or legal counsel before taking action on this program.
PLEASE SCROLL DOWN FOR ADDITIONAL INFORMATION ON THE STIMULUS PACKAGE, LOCAL STATE AND FEDERAL PROGRAMS AND OTHER RESOURCES PERTAINING TO THE COVID-19 RECOVERY PROGRAMS.
Today, the House of Representatives will attempt to pass the historic $2 trillion stimulus package that passed in the Senate earlier this week. With a successful vote, the bill will be sent to the President of the United States’ desk to be signed into law. As of now, here are some updated websites that help explain what is in the proposed bill.
CARES Act Unemployment Insurance: https://gop-waysandmeans.house.gov/wp-content/uploads/2020/03/CARES-Act-Unemployment-Insurance-Explainer_3.26.pdf
Summary: It dedicates $250 billion to give workers more access to Unemployment help during this public health emergency through:
Please scroll down for additional details and a library of links for local, state and federal programs. We’re in this together, we will emerge, and emerge stronger.
Small Business Administration:
Single Family Business Relief:
Tax Relief: Deadline moved to July 15th.
Homeowner Relief: 1.) Suspends Evictions for next 60 days. 2.) Mortgage payments suspended up to 12 months:
Are you faced with layoffs? Click here to understand provisions to help your business and employees: https://www.dol.gov/newsroom/releases/eta/eta20200312-0
For our Canadian customers, here is a resource for clients to start with: https://www.canada.ca/en/public-health/services/diseases/2019-novel-coronavirus-infection/awareness-resources.html
Counties: Baldwin, Covington, Escambia, Geneva, Houston, Barbour, Chambers, Cherokee, Cleburne, De Kalb, Henry, Houston, Jackson, Lee, Randolph, Russell
Counties: Clinton, Des Moines, Dubuque, Jackson, Lee, Louisa, Muscatine, Scott
Please Review How DHS Views Your Business
With states actively issuing stay at home orders except critical businesses/employees, please find guidance from the Department of Homeland Security. Page 6 has specifics relating to Food Service. Three Square Market can not issue guidance pertaining to how you view this and by no means encourages you to ignore any directives from any government authority.