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Congress recently passed the $2.2 trillion economic stimulus package known as the CARES (Coronavirus Aid, Relief and Economic Security) Act to combat the financial losses of families and businesses from COVID-19. This includes $350 billion in funding for the Paycheck Protection Program (PPP) aimed to maintain employee retention at full compensation.
If your small business maintains payroll during this economic crisis, some of the money borrowed through the Paycheck Protection Program can be forgiven. The goal is to help small-business owners and their employees ride out this economic storm. Principal and interest are deferred for up to a year and all borrower fees are waived.
The amount you can borrow depends on how much you paid your employees over the last year, up to 2.5 times average monthly payroll cost, with a maximum loan of $10 million. The more you paid in payroll before the COVID-19 outbreak, the more you can borrow. This includes wages, salaries, retirement contributions, healthcare benefits, covered leave, and other expenses.
When to apply?
Starting tomorrow, Friday, April 3, small businesses with fewer than 500 employees are eligible to apply to the Paycheck Protection Program. These include firms that are nonprofits. It also includes sole proprietorships, self-employed individuals, independent contractors, and veteran organizations. Loans will be provided on a first-come, first-served basis.
How to apply?
Small businesses can apply for these federally backed loans with private financial institutions that are part of the Small Business Administration's (SBA) lending network.
The first step prospective borrowers should take is contacting their current bank. The application can be found here: https://www.sba.gov/funding-programs/loans/paycheck-protection-program-ppp.
Businesses that don’t take Small Business Administration loans may be eligible for a tax credit administered by the Internal Revenue Service.
At IT Solutions, we’ve been keeping up with the legislation since it was first announced. If you have questions about the process or guidelines, we’re happy to discuss. Reach out to ITS President Garrett Graney or Founder Ted Swanson to set up a time to chat.