The Small Business Administration (“SBA”) is preparing a final checklist and application for the Payroll Protection Program (“PPP”) loan established by the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”). Businesses are encouraged to begin pulling together all information to apply for a PPP loan by gathering the information on the checklist. PPP loans will be handled through SBA lenders. Businesses interested in PPP loans are encouraged to discuss the PPP loan with their bankers and gather the recommended information in anticipation of loan application release by the SBA.
An attractive component of the PPP loan program is the ability to have the PPP loan forgiven. A business is required to retain its employees for 8 weeks after receiving the loan. Any layoffs or salary reductions during the 8-week period will reduce the amount of the loan forgiveness by deducting the cost of their wages from the amount of the loan eligible for forgiveness. The loan forgiveness is a federal subsidy to encourage employee retention.
In addition to the PPP loan program, the CARES Act provides a deferment of the payroll taxes for the period of March 27, 2020 through December 31, 2020. Payment of 50% of the payroll taxes may be deferred until December 31, 2021, with the remaining half due December 31, 2022. Payments of the payroll taxes must be made by the due date to avoid penalties.
The SBA has prepared guide to the CARES Act for small business owners, including information about loan programs, counseling. and training. You can access the guide here.
We are committed to assisting our clients through the loan process, and we will provide updates as more information becomes available. Please contact Joan Berg (312-775-3624; email@example.com) with any questions you may have.