Paycheck Protection program
What is the Paycheck Protection program?
The Paycheck Protection Program (PPP) is a Small Business Association loan program created by of the Coronavirus Aid, Relief, and Economic Security (CARES) Act to help keep business ongoing during the COVID-19 pandemic. It covers businesses with less than 500 employees based in the United States at 100 basis points or 1% interest.[1]
Can these loans be forgiven?
Yes, section 1106 of the CARES Act allows these loans to be forgiven entirely if the funds are used for payroll costs, interest on mortgages, rent payment and utility payments.[2] This is further reduced by looking at the number of employees at the start of the program versus at the end.[3]
When do they calculate the headcount?
The Small Business Administration’s form for PPP loan forgiveness compares the headcount at the time of the loan application to the headcount at the time of the application for forgiveness.
Do I have to provide documentation to my bank?
Yes, you are required to provide evidence such as payroll records (including payroll tax records), cancelled checks and receipts, and a certification verifying the authenticity of the records.[4] If you do not provide these records, your loan cannot be forgiven.[5]
But I have more questions!
If you have more questions (about rehired employees, independent contractors, employees who refuse to return, salary caps, etc.) call the Law Offices of Ricky Shah. We focus on small business owners and are always available to help.
[1] Small Business Association: Business Loan Program Temporary Changes; Paycheck Protection Program, 13 CFR 120 (Apr. 15, 2020).
[2] Pub.L. 116–136 (the CARES Act), section 1106, subsection (b).
[3] The CARES Act, section 1106, subsection (d)(2).
[4] The CARES Act, section 1106, subsection (e).
[5] The CARES Act, section 1106, subsection (f).
