The U.S. Treasury has released its application for the Paycheck Protection Act and has announced that banks can begin processing them as early as Friday. Download the application and the instructions for filling it out from Treasury’s website.
Some things to know:
Where to Apply
Unlike the economic injury loans, paycheck protection loans will be granted through banks. This includes any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating, as well as existing Small Business Administration (SBA) lenders. The list of SBA lenders will be expanded as more institutions qualify for the program, so check the SBA’s list for updates.
Sole proprietors, Nonprofits and Independent Contractors
Small businesses, sole proprietorships, nonprofits and veterans organizations can begin applying for loans beginning April 3; Independent contractors and the self-employed can start applying April 10.
Loan Forgiveness
Businesses will be required to begin repaying the loan in six months unless part or all of it is forgiven. Up to the full amount of the loan can be forgiven if you can document that the money was used to maintain your employment at 2019 levels and you did not significantly reduce employees’ pay.
The SBA is anticipating that no more than 25% of the forgiven amount may be for non-payroll costs, and that the payroll portion of forgiveness could be reduced if you decrease your full-time employee headcount and/or decrease salaries and wages by more than 25% for any employee who made less than $100,000 annualized in 2019.
If you have already let people go, you have until June 30 to restore your full-time employment and salary levels for any changes made between Feb. 15 and April 26, 2020 to still qualify for loan forgiveness.
If a business such as a restaurant has been closed as a result of the NJ mandate and all employees have been laid off or furloughed, if seems to me they cannot qualify for the PPP loans. The prospect of bring workers back is unlikely until the mandate is lifted.
I believe they could take the employees back pay them minimum wage $11/ he for their hours and they would then qualify. That would reduce the stress in UI
I believe that your employees don’t need to be actually working. You need to maintain payroll
Thanks for the comments. You can rehire people you have already laid off and still qualify for loan forgiveness. Businesses have until June 30 to restore their employment levels to full employment, and no, they don’t actually have to be working, just receiving pay. If you rehire anyone let go between Feb. 15 and April 26, you can still qualify for loan forgiveness.
Parts of the loan can still be forgiven even if you don’t get back to your full complement of employees. Treasury says the forgiven parts will simply be reduced for any of the funds you did not spend on qualifying operational costs.
Please examine the instruction sheet provided by the U.S. Treasury. https://home.treasury.gov/system/files/136/PPP%20Borrower%20Information%20Fact%20Sheet.pdf
Good luck, and hang in there.
Great Information.
Does anyone know where to apply? I filled out the form on the SBA website but where do i submit it? All bank lender websites that I visit say that the are not doing this.
Thanks!!!
I am confused about what box to check off at the top of the Paycheck Protection Program Application. I am a sole proprietor LLC but the choices at the top of the application (Non-profit, Vet org, Ind Cont, Self Employed) do not list that as an option. Do you leave it blank?
Thank you for your question, Christina.
These check boxes are not on the SBA’s regular 7a loan applications so I could not find instructions on the SBA website.
However, I did check with an attorney who is familiar with the issue. The best idea is match how the individual/business is structured for tax purposes (i.e., whether income is reported on a 1099 basis). The definition of “self-employed” flows back to the IRS Code definition.
Your accountant would be better positioned to make the call.
Hope this is helpful. Good luck.
What about SCorp and CCorp? None of the options address those types of entities?
We are a small business sole proprietor with two part time employees that we re keeping on full payroll. Can my husband and I, as co owners, use the paycheck protection, or do we file for unemployment for ourselves?
What if some of your employees applied for unemployment already? Do they wait and see if they are accepted and then refuse it if or Child Care Center gets approval for this loan?
Does anyone know timing of these loans. It will great to be covered for payroll/costs eventually but I assume you have to have funds to operate in the meantime.
Thanks for reaching out to NJBIA. The grant application will start tomorrow and the loan info sometime next week. But you should get your information together as soon as possible so you are ready to apply asap.
You should check out our resource page at https://njbia.org/coronavirus. We update almost hourly so you can get up to the minute information – including links and ways to apply for loans, grants and unemployment. Also, check out http://www.cv.business.nj.gov to get to the eligibility wizard. This can help you determine how to apply and what is best for your company.
Do you happen to have any information for New York? I dont know what bank to submit to?
Thanks
My bank told me they are handling the PPP but did not know about the Federal program : Economic Injury Disaster Loans and Loan Advance, which is a working capital loan for loss of revenue. We applied online, received a conf. # but have heard nothing. Who is administering this loan?
Thanks for the question Robbin.
The SBA is administering the economic injury loans directly, while the Paycheck Protection Program is through its network of approved lenders. For EIDL loan status, check with the SBA.
Good luck.
I am answering my own question. I actually talked to someone at SBA! They are administering the Economic Disaster loan separately by their own loan team. Once you fill out the online app., it takes up to 10 days to receive an email. If approved, you can receive 10K that is forgiven. Additional loan $ must be paid back after 12 mos, over 30 years at 3.75%.
Thanks Robbin. You saved me an email.
Be careful some programs are either or. I do not believe you can obtain both the SBA Econpmic Diaster Loan and the Pacheck Protection Program. You need to figure out which is most advantageous for you. You can apply for both but can not get both.
Thanks for the comment Jim. To clarify, a business can get both a PPP and an EID loan, but they cannot be for the same thing. For instance, if you are claiming economic injury on an EIDL because you are still paying your employees even though they’re not working, you wouldn’t be able to get a paycheck protection loan. Otherwise, a business would receive two aid packages for the same thing, a kind of double dip.
It’s always best to consult with your attorney and/or accountant who know your business’ particular circumstances for the best advice.
My husband and I own a driving school and driving schools are not included in the grant program for some reason. Is there any way that other categories like ours (NAICS 611…) might be added to the list of businesses eligible to receive a grant?
Marybeth
I forwarded your question. You should be hearing back from someone at NJBIA.
Thr PPP application asks for number of jobs. i believe I have read somewhere it should be full time equivalents. If you have part time employees, how do you deterime full time equivalents?
Thanks for the question.
The loan amount is calculated based on your full payroll, which is backed up by your 2019 tax return. The number of employees only matters when it comes to forgiving the loan afterwards, and the full-time equivalents would be needed to show whether individual wages or salaries were significantly reduced.
If you maintain the full number of employees, the loan can be forgiven.
If you do not reduce their salaries by more than 25%, the loan can be forgiven. To calculate the salaries, you would multiply your total payroll costs by the number of full-time equivalents the loan is supposed to support and then divided by the average number of full-time equivalents per month on your payroll between Feb. 15 and June 30, 2020.
My husband and I own and work at our business, but we do not draw a paycheck. How would that be included in our payroll estimate to apply for the Paycheck Protection Program?
Thanks.
Our company started in February, 2019 and we hired 3 part time employees in January, 2020. Do we qualify to apply for the PPP loan?
Is it ok for the Company owner to calculate net income as his pay if he is not on payroll. ? Or is this only for w-2 employees?
I am a sole proprietor . Small Business LLC Revenue repoerted to IRS/NJ as a individual ..
I maintain a bank account for the LLC the revenue from the LLC is used to compensation me as the sole proprietor .
How can I apply succesfully for the PPP
I am an independent contractor and I do not have a business legal name. Should I leave it blank on the PPP application?
For the PPP, my husband and I work for the same company. I am over the $ 100,000 salary and he is under $ 100,000. When calculating the loan amount, would they have a different salary cap for married couples?
Can you apply with 2018 tax returns if 2019 has not been completed?
I thought that the first round of this was based on 2018 if 2019 was not done. Has that changed.
Thank you