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CARES Act Payroll Protection Program FAQ’s – Covid 19 Small Business Relief

By Tim Brown
Updated March 31, 2020
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Payroll Protection Program – Frequently Asked Questions CARES act for small business, how much, when, who qualifies
Tim Brown
Tim Brown

Tim Brown is the owner of Hook Agency, an SEO and Web Design company focused primarily on driving traffic and leads for small businesses, roofers and construction companies.

Have this post read to you in a natural voice, so you can do other things:

The CARES act just opened up a ridiculous amount of working capital for small businesses during this global pandemic. The application process will open up soon – you should be preparing your last 3 years’ taxes / and financials just in case they’re needed to apply. Whether you’re a libertarian or a socialist – the fact remains, someone is getting these loans and frankly, it would be a disservice to your people not to apply for them if you qualify.

Why? Because the loan could be 2 and a half times your payroll and it’s FORGIVABLE.

Meaning – legitimately free money – if it’s used for qualified expenses.


Hook Agency is not a financial services company – and generally doesn’t relay money-related business information. However, for the purposes of helping the small businesses – who we love to champion – I wanted to make sure we relay the best information we can find about the CARES act – and particularly the Payroll Protection Program that it contains. 


How much can you get in a PPP loan?

The maximum amount of a PPP loan available to each borrower is equal to the lesser of: (a) $10 million, or (b) 2.5 x its average total monthly payroll costs, as defined in the Act.

Can I qualify for PPP if I have to layoff people?

Generally, if the employer does not reduce employee headcount or pay under the parameters set forth by PPP, the loan is completely forgivable. For some employers previously left with no option but layoffs or furloughs, PPP may provide the lifeline they need to retain employees through this COVID-19 crisis. Regulations on PPP loans are coming and there is not yet a mechanism for employers to apply for PPP loans. – Haynes Boone

What does the loan from the CARES act PPP cover?

The proceeds of the loans may be used for the following:

  • Payroll costs;
  • Costs related to the continuation of group health benefits during periods of paid sick, medical or family leave, and insurance premiums;
  • Employee salaries, commissions or similar compensation;
  • Mortgage interest payments;
    Rent;
    Utilities; or
  • Interest on other existing debt obligations.

Who qualifies for the CARES act PPP?

The loan is for companies under 500 people, and people will be required to certify:

  • The uncertainty of current economic conditions makes the loan necessary;
  • The funds will be used to retain workers and maintain payroll or make mortgage payments, lease payments and utility payments; and
  • It does not have an application pending, or it has not received a loan, under the PPP for the same purpose.

 

 

What do you have to do to ensure you actually get the loan forgiveness?

  • Documentation verifying the number of FTEs on payroll and pay rates for the period beginning Feb. 15, 2020, and ending June 30, 2020, including payroll tax filings reported to the IRS and state income, payroll, and unemployment insurance filings;
  • Documentation verifying payments on mortgage obligations, lease payments and utility payments;
  • A certification that the amount for which forgiveness is requested was used to retain employees, make mortgage interest payments, make lease payments or make utility payments; and
  • Any other documentation SBA determines necessary.
  • The lender must make a decision regarding an application for loan forgiveness within 60 days after receipt of the application.

 

What should you prepare now if you believe you may qualify for the PPP in the CARES act?

  • SBA Form 1919;
  • Articles of incorporation/organization;
  • Bylaws/operating agreement;
  • Payroll expense verification documents, including IRS Forms 941 and 944, payroll summary reports and bank statements, summary of payroll benefits;
  • Trailing twelve-month profit and loss statement;
  • Mortgage or rent statements; and
  • Utility statements.

Who should I be asking about the Payroll Protection Program?

PPP loans will be made by SBA-approved lenders. Loan applications and supporting documentation will be submitted directly to these lenders. SBA is expected to issue guidance to lenders, including detail on how to apply and the criteria SBA will use to determine who will receive loans, within 15 days of enactment, although it may be issued sooner.

How do I apply to receive the PPP loan?

You will apply to your normal bank.

Banks are taking action now to prepare for the significant volume of applications they expect to receive. Businesses should start assembling documentation to expedite the application process, including these items:

    When should I apply for the PPP Loan?

    From what I understand, if you are eligible you should apply as soon as banks allow – which is likely before April 10th, 2020.

    Who should I be working on the PPP Loan with?

    We strongly suggest working with your qualified accountant, or tax preparation company to make sure you have all of the information needed before applying for the PPP loan.

    This will certainly be much easier – if you have historically worked with someone, and have been diligent about record keeping.

    Talk with your accountant or financial institution to take advantage of the PPP.

    The only reason I wanted to share this on our blog is that I believe it will be helpful for small businesses. I’ve watched countless YouTube videos trying to understand this, and I felt that some were super long, redundant, or didn’t cut to the chase – so I wanted to curate the most important questions as soon as possible.

    Check out Washington Post’s article: Here’s how to get a small business loan under the $349 billion coronavirus aid bill

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    Tim Brown
    Tim Brown

    Tim Brown is the owner of Hook Agency, an SEO and Web Design company focused primarily on driving traffic and leads for small businesses, roofers and construction companies.

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