With the advent of the $2.2 trillion (yes, that’s a t, not a b) government stimulus package in light of the novel coronavirus, there is a specific program—the Paycheck Protection Program (PPP)—we feel may be beneficial to many of small business owners. This is a $349 billion allocation of the fore-mentioned funds specifically designed to aid employers in keeping their employees on the payroll and covering their operational expenses to keep the proverbial "doors" open.

From what we understand, the majority of small businesses and employers in the U.S. are able to and encouraged to apply. If that's all you needed to know, you can reach out to your local banker to get your hands in the pot and get started filling out an application here.

Rarely do the words "free" and "money" occur in the same sentence. But in a few more words here, the PPP says that if a borrower is approved for a loan, the proceeds will be forgiven so long as:

• Proceeds are used to cover payroll costs, most mortgage interest, rent and utility costs during the 8-week period following receipt of loan funds

• Employee and compensation levels are maintained

The many rules, regulations, stipulations and interpretations of the program can be found on this 

PPP FACT SHEET.

Summarized below are our interpretations:

Apply early. High participation in this program is expected and there is a funding cap. It also takes time for lenders to process loans, so get it done well before you need the funds.

You may only take out one loan. Get it right the first time!

The program dictates that in addition to payroll costs, funds can be used to pay for rent, mortgage interest, and utilities for the 8-week period. But at a later point in the document, there is a caveat that basically says, "because we are expecting a large volume of applications, non-payroll related expenses will likely only be forgiven at 25%," which means 75% of the rent that you paid using the PPP funds will need to be repaid. 

If used exclusively for payroll costs, the loan will be forgiven given the following:

• Your number of staff DOES NOT decrease.

• Salaries paid to employees DO NOT decrease more than 25% for any employee who made less than $100,000 annualized in 2019.

• If you preemptively made staffing and salary decisions before applying for this loan (and knowing the circumstances for forgiveness), you have until 6/30/2020 to restore your full time employment and salary levels for changes made 2/15/2020 – 4/26/2020.

You must request forgiveness from the lender you received the funds from. They will require verification of the above staffing and salary requirements.

If not forgiven in its entirety, loan payments need not be made for six months, but must be paid in full within two years. The loan accrues interest at a 1% fixed rate and accrues over the entire period, whether or not loan payments are being made. 

Loans may be given for up to two months of your average monthly payroll costs from the last year, plus an additional 25% of that amount subject to a $10 million cap.

If you don’t have employees, you are better suited for the Economic Injury Disaster Loan (EIDL).

If you don’t know where to start, you’re not alone. Consult your accountant and local Bank who participates in the Paycheck Protection Program.

Note: This information may be constantly changing and there may be more updated information available.