Last month, Congress passed, and the President signed into law, the largest stimulus in U.S. history, with a price tag of more than $2 trillion. There is a lot of emergency assistance for small businesses, but what are these programs and how do you access them? We plan to host a webinar on this in the coming weeks, but in the meantime, we are providing some high-level guidance.

The Paycheck Protection Program (PPP)

The purpose of the PPP is to cover payroll costs during the time everything is shut down, approximately from February 15 to June 30.

  • This program allows for 100 percent government-backed, low interest 7(a) loans to be available for affected small businesses up to 250 percent of monthly payroll costs, up to $10 million.
  • The loans can be forgiven in an amount equal to what is spent on payroll, rent, and mortgage interest (on leases and mortgages in effect on February 15, 2020).
  • The loan amounts are supposed to cover payroll costs between February 15, 2020, and June 30, 2020.

PPP Eligibility

  • Small businesses employing
  • Additionally, sole proprietors, independent contractors, gig economy workers, self-employed individuals, non-profits, and veterans’ organizations are all eligible.

Please note, you cannot take unemployment insurance and a PPP loan as a sole proprietor or independent contractor.

PPP Loan Forgiveness

  • The principal amount that may be forgiven is equal to the sum of expenses for
    • Payroll (at least 75 percent of the forgiven amount must be spent on payroll),
    • Existing interest payments on mortgages,
    • Rent payments,
    • Leases, and
    • Utility service agreements.
  • The forgiven loan amount is reduced proportionately to the reduction in the number of employees retained compared to last year.
  • Amounts must be spent between February 15, 2020, and June 30, 2020, to qualify as forgivable expenses.
  • The loan forgiveness amount will not count as taxable income.
  • The forgiven loan amount is reduced by the amount of any Disaster Loan grant received.

PPP Lending & Terms

  • The lender determines eligibility, not the government.
  • The interest on the loan is not required for the amount of the loan that’s forgiven.
  • Amounts not forgiven are determined on a case-by-case basis but capped at 4 percent (and 10 years), with a 100 percent loan guarantee by SBA.
  • Any payments are deferred for six months.

Applying for PPP

Economic Injury Disaster Loans (EIDLs)
  • About and Eligibility
    • Advice is generally to apply for PPP first since you can’t use EIDLs for the same purpose as PPP loans.
    • Same eligibility requirements as PPP (EIDLs are technically only available for “disaster areas,” but the whole United States is declared a disaster area).
  • Lending and Terms:
    • The application for this is directly to SBA rather than a lender.
    • 75 percent for up to $2 million.
    • Advances of up to $10,000, available via the same application linked below.
  • Apply here: https://covid19relief.sba.gov/#/
Unemployment Insurance (UI)
  • UI is administered by state governments, so if this is the best option for you or your employees, you need to contact the state department responsible for UI.
  • However, the federal government is adding $600 per week to each UI beneficiary’s check, in response to the COVID-19 national emergency. It does not appear that you need to do anything additional to receive this additional amount; it appears to be an automatic addition.
  • The full amount of UI assistance will vary by worker and by state.

We will be following up with a webinar in the coming weeks, but please let us know if you have any questions, and as always, reach out to Brad ([email protected]) or Graham ([email protected]) for more information