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How to get a piece of the pie!

This post has been updated with the new information in highlights. The updates come from the latest information released from the Department of the Treasury (click here for a link to the site.)

While the coronavirus is making the rounds, the U.S. government is responding to the economic meltdown with the

Coronavirus Aid, Relief, and Economic Security Act

(CARES) act HR 748

Described below are three important sections of the act. I hope you find them useful.

Section 1102. Paycheck Protection Program (PPP). Highlights:

  • Available to businesses open since Feb. 15, 2020.

  • Apply through an SBA-Approved bank.

  • Amount you can request is equal to 2.5 times the monthly average of payroll costs between February 1, 2019 and January 31, 2020.

  • Payroll costs include: salaries, wages, state and local wage taxes, health insurance, vacation, sick leave, tips, severance, retirement and payroll processor fees. Include full-time, part-time and/or “other” basis employees. Does NOT include independent contractor payments. The agency determined that Independent Contractors are able to file for PPP Loans so should not be considered in the application.

  • Loans are 100% guaranteed by the SBA

  • Loans can be forgiven (converted to a grant) if the borrower can show that the funds were used to maintain employment for your workers at the level prior to January 31, 2020. Also note, that you should keep them on the payroll for a minimum of 8 weeks.

  • Any salary amounts above the $100,000 minimum should be calculated at $100,000.

  • Should the loan not be forgiven, payments at a rate of 1% will begin after a 6-12-month deferment. The loan period will be two years.

Suggested paperwork to have ready:

  • Supporting information for the monthly average payroll costs from Feb 1 2019 to Jan 31 2020.

  • Last 3 years of Federal Income Tax Returns

  • Financial Statements for 2019

  • YTD Financials for 2020

The CARES act authorizes $379,000,000,000 to use for this section. That’s THREE HUNDRED SEVENTY-NINE BILLION DOLLARS.

The actual application is ready for Section 1102 PPP, so get prepared now and log into your bank online to find and complete the application for a quicker application process.

Section 1106. Highlights:

  • Indicates that amounts will be forgiven from PPP loans that are used in accordance to the intent of the act.

  • This includes the payroll items mentioned above plus: Interest payments on a mortgage, rent, utilities.

Section 1110. Highlights:

  • Covered period of this section is January 31, 2020 thru December 31, 2020.

  • Eligible persons are: businesses with not more than 500 employees; sole proprietor (with or without employees); NOT independent contractors; cooperatives not more than 500 employees; ESOP; Tribal small business concern and nonprofits.

  • All above are able to apply for a direct loan from the SBA (Small Business Association) in an amount not to exceed $10,000.

  • Use of funds: provide paid sick leave for employees with COVID_19; maintaining payroll during the economic slowdown; meet increased costs due to interrupted supply chain; making rent or mortgage payments; and repaying obligations that cannot be met due to revenue loss.

  • This opportunity expires December 31, 2020.

  • As is the case with the other sections above, this loan will be forgiven if there is documentation indicating that the funds were used as intended through this act.

The CARES act authorizes $10,000,000,000 to use for this section. That’s TEN BILLION DOLLARS.

This is where a good BOOKKEEPER comes in handy! She can help you put together the calculation and manage the funds as they are spent to ensure that they are spent in a manner that qualifies for forgiveness on the loan.

We hope this information is helpful. A few links to follow for more information or to apply:

Find an SBA-Approved lender: https://www.sba.gov/funding-programs/loans

Stay healthy and Wash Your Hands!

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