The Latest on the Paycheck Protection Program

The SBA announced on April 16 that all of the PPP’s initial funds have been exhausted. Banks may not accept PPP applications unless Congress provides more funding for the program.

Of all of the provisions of the CARES Act, the Paycheck Protection Program (PPP) is, perhaps, the most beneficial to small businesses. Congress established the PPP to help businesses retain employees and maintain their payroll as they navigate through the economic disruption caused by the COVID-19 outbreak. Banks began accepting applications for PPP on April 3, and now is the best time for small business owners to act in order to obtain the benefits offered through the program. 

A full description of the PPP can be found in our COVID-19 Resources. Briefly, the program allows small businesses and 501(c)(3) non-profit organizations to borrow up to 250% of their monthly payroll cost through unsecured, low-interest loans. Applicants must certify that they will use PPP funds for payroll expenses, rent or mortgage payments and utilities. Remarkably, if a borrower maintains its employee and payroll levels, some or all of the PPP loan may be forgiven. This program is a significant opportunity for companies and non-profit orgnanizations who wish to maintain their employees’ salaries with little to no disruption during the stay-at-home mandates.

Your first step in pursuing a loan should be to check your bank’s website. Many banks have online applications, and those who do not often provide details about the application process. If you are unable to find the information on how to apply with your bank online, call your bank representative. 

Documentation requirements vary among banks, but applicants should expect to provide:

• A completed loan application (SBA Form 2483)
• Evidence of their monthly payroll costs, such as payroll tax returns (Forms 941 and W-2) or payroll reports
• Proof of employee benefit expenses, such as employee health insurance and retirement benefits
• Profit & Loss statements for 2019 and year to date for 2020
• Organizational documents, such as operating agreements or articles of incorporation
• Information about the business owners, including their names, social security numbers, home addresses and ownership percentages

While the CARES Act sets aside $349 billion for the program, we anticipate all of the funds will be claimed and the opportunity may not be available to late applicants. Be sure to act quickly as resources are not unlimited. Because of the high demand, some banks already put a hold on new applications in order to process those they received initially. If you think your business can benefit from the PPP we recommend you reach out to your bank to begin the application process as soon as possible.

If you have questions about the Paycheck Protection Program or need assistance with your application, please don’t hesitate to contact us.

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Our firm provides the information in this article for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal or other competent advisors. Before making any decision or taking any action, you should consult a professional advisor who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this blog are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability and fitness for a particular purpose.