What do we know so far?
Congress passed a $2.2 trillion bill which earmarked $350 billion in funds for Small Business Administration (SBA) loans through the Paycheck Protection Program.
The emergency loans are intended to cover payroll, benefits, commissions and similar types of compensation; payments of interest on mortgage obligations or rent; and utilities for qualifying small businesses. The loans are available through June 30, 2020.
Banks, credit unions and lenders can issue these loans which are fully-backed by the SBA.
Where do I go to borrow this money?
These loans are available through most financial institutions, including banks and credit unions. You can contact your current bank to learn more about their application process.
If you are located in NY, NJ or PA, loans are also available through Pursuit Lending, a lending institution that operates almost exclusively through the SBA. More information is available at https://pursuitlending.com/about-us/
Who is eligible?
Small businesses and 501(c)(3)s must meet the following criteria in order to be eligible:
Here is a link to the SBA’s size standard by industry to help determine if you are considered a small business:
How much can I borrow?
These items don’t qualify as payroll costs:
Payroll for sole proprietors, independent contractors and self-employed individuals:
Terms and Conditions
What’s the forgiveness provision everyone is talking about?
After funds are disbursed, business owners can apply for the portion of the loan to be forgiven that covers qualifying costs of payroll, mortgage interest, rent and utilities. These costs must have been incurred and paid during the eight-week period immediately follow the granting of the loan. The amount of loan forgiveness cannot exceed principal. The amount of the loan that is forgiven will not be treated as taxable income.
Can the amount of forgiveness be reduced?
Yes. If there is a reduction in the number of employees or a reduction greater than 25 percent in wages paid, then a portion of the loan will not be forgiven.
What if I bring back employees or restore wages?
The full amount of the loan may still be forgiven if the borrower reverses the reduction in wages or reinstates all employees by June 30, 2020. This applies to any reduction in payroll or personnel that occurred on or after February 15, 2020.
About the Authors
Chelsea Bell is a Senior Associate on the CFO for Hire team. Chelsea is a graduate of Johnson & Wales University with a Bachelor’s in Accounting with a minor in Economics and a graduate of SUNY Albany with a Masters in Professional Accountancy. Chelsea specializes in closely held businesses and not-for-profits.
Jim is the Partner in charge of the CFO for Hire division of BST & Co. The CFO for Hire division is an outsourced solution for a company’s operational accounting needs. CFO for Hire delivers timely financial information/reports to better help a business owner or not for profit executive director make more informed business decisions.
Jim’s primary responsibilities are managing complex engagements and leading special projects. He also provides leadership on corporate development, product development, and sales and marketing matters.
Posted on March 30, 2020 at 4:56 PM