The PPP also known as the Paycheck Protection Program is a loan from the Small Business Administration also known as SBA, which assist small businesses in keeping workers employed during the COVID-19 virus. This ensures that workers will stay on the payroll and will continue to receive paychecks during the lock down. The SBA will forgive the loan if certain requirements are met like spending the money on payroll and other qualified expenses and if there is no reduction employee counts during certain time frames. The money does have to be spent during the 8 weeks and must be used for essential needs such as paychecks, rent, mortgage interest, and utilities.
Any business can apply for a PPP during these difficult times that are qualified for a loan from the SBA. They must meet the measurement sizing standards. This loan is for any type of business, non profit businesses, veteran organizations, and tribal organizations. The other requirement is that the organization has to have under 500 employees. The only exception to this requirement is if the business is an accommodation or food organization with under 500 employees per location.
The loan will be forgiven if there are certain circumstances that arise. If the money is used for paying their employees, interest on mortgages, rental fees of the building, and utilities as mentioned before. The loan payments will defer for up to six months. Fortunately, you don’t have to worry about collateral. This type of loan also has a maturity of two years and a 1% interest rate. Proper bookkeeping and documentation will be required for forgiveness.
Other Types of Loan Assistance for Small Businesses
The SBA sent out two rounds of loans to small businesses across America. If you did not receive or qualify for that particular loan, there are other options. There is another option entitled Enhanced Debt Relief or SBA Debt Relief. What this program does is it covers six months of principals, interests, fees, and microloans for existing SBA loans. This option is not available with the Paycheck Protection Program or Economic Injury Disaster programs. The nice part of this process is that no one has to apply for it, and that this type of assistance will automatically be given to small businesses if they meet certain criteria.
Any loans that are not in deferment will be covered by the SBA on the next due date of the loan and will continue for six months. Any loans that are in deferment will be covered by the SBA after the deferment has ended and will monthly payments on it for six months. Any loans made after March 27th, 2020 and that is disbursed before September 27th, 2020 will be covered by the SBA on the first due date of the loan for six months. The Small Business Administration has communicated to the micro loan lenders that they will cover the loan costs financially for the small businesses.
Look Locally too!
Denton County has launched the OPEN (Operational Plan for Economic Normalization) Grant with $2.2 million available through grants for businesses physically operating within Denton County. The goal of this program is to help the businesses that have been closed the longest and negatively impacted by COVID-19. See link for more info and to apply starting May 13: https://dentoncounty.gov/open
Conclusion
There is help for your small businesses if you fit the criteria and guidelines to receive the loans and credits. Master Plan Tax Service Is proud to serve in Denton County and is happy to help with SBA loan consulting and CFO job functions.