As the Coronavirus pandemic rages on, the federal government is lending small businesses a helping hand.
The ‘Coronavirus Aid, Relief, and Economic Security’ Act or CARES Act continues to offer support to those impacted by COVID-19. “The CARES Act created a program called the ‘payroll protection program’ also known as PPP.”
The act makes $349 billion available as loans to help keep small businesses afloat during this pandemic. The program is unfolding in rounds. “The PPP Program is for any small business that basically has under 500 employees. That’s round one and it doesn’t matter what type of business structure you are. You would actually qualify for it if you have employees you’re paying a W2 on.”
The loan is based on the calculations of the payroll for 2019. “The benefit to the government, like I said, is it keeps people off of the unemployment lines. The benefit to the employees is that employees will get a steady paycheck and more importantly they don’t lose any of their employee benefits like their health insurance as well as their retirement benefits. Now, the benefits for the employer is that a small portion of this PPP loan is made available to that employer to pay rent and utilities.”
Friday, round two begins and it includes real estate agents, landscaping companies, hair stylists, and those who work in construction. “The problem with this is that SBA has been very slow to issue guidance to the banks and everything as far as how they’re going to calculate the loan amount because most of these people file under schedule C under their income tax return. So, they’re still trying to work through how they’re going to determine the loan amount.”
C.P.A. Dan Burton says it is important to work to get your applications in for this program and give the process time. “Stay calm. The government’s not gonna run out of money. There’s been a rush to get all of these loans. Be diligent and get your applications completed, get them turned in. The second thing is there are no closing costs related to these loans which is very beneficial to a small business because the SBA is actually paying the banks to do the loans and they’re actually paying the banks a fee. So, like the accountant or your attorney can actually help in the application part of it.”
For more information on the Payroll Protection Program visit sba.gov.