CARES ACT: Paycheck Protection Program
Update from Corporate Solutions
CARES ACT: Paycheck Protection Program (part of the H.R. 748)
** The ACT has passed the Senate the House as of today Friday (3/27). The President will need to sign, then the Banks will need to receive implementation guidance from the SBA before the program is available to clients/employers. **
Key Program Details (subject to change prior to final Government regulations and guidelines):
CARES ACT: Paycheck Protection Program – Employer/Client Eligibility –
Small businesses, non-profits, self-employed, and independent contractors.
(Churches and/or religious affiliated businesses MAY qualify – details to come)
Must meet SBA Size Standards (based on NAICS Code of subject business).
CARES ACT: Paycheck Protection Program – Loan Amount –
Lesser of $10MM OR any outstanding balance on SBA Disaster Relief loans obtained between January 31, 2020 through date debt is eligible to be refinanced (information included within your Disaster Relief loan documents) PLUS:
- Existing Business:
2.5x the average monthly payroll cost incurred and paid over the year prior
- New Business (less than 1 year):
2.5x the average of 2 months payroll from January 1st to February 29th, 2020
- Seasonal Business:
2.5x the average of monthly payroll from February 15th or March 1st, 2019 through June 30, 2019.
*Payroll costs include salary, wages, and payment of cash tips, employee group health care benefits, including insurance premiums; retirement contributions; and covered leave. The portion of Salaries/Wages over $100,000 per employee will not be included; and 1099 contractors up to $100,000 ( requirements and guidelines to be determined)
CARES ACT: Paycheck Protection Program – Loan Requirements –
No Personal Guaranty
No Collateral Requirements
$0 Guaranty Fee
Business must certify loan is necessary to continue to operate, retain their employees, and/or make mortgage and utility payments and that you have not applied or received another 7(a) loan for similar purposes.
CARES ACT: Paycheck Protection Program – Loan Forgiveness –
Calculated based on payroll costs, mortgage interest, rent, utilities for the 8 week period paid after loan origination. Payroll costs capped at $100,000 per employee over $100,000 will not be considered in the forgiveness application.
*Amount will be reduced if the # of employees used to determine loan amount is decreased or salary expense is reduced*
Business must certify funds were utilized to keep business operational and retain/pay employees.
CARES ACT: Paycheck Protection Program – Documentation That May Be Required – Yet to be determined
SBA is formulating a modified application form that will be used for this program. It has not yet been released.
To prepare for the application:
- Gather business financials showing your monthly payroll costs that will be utilized to determine the loan amount.
- Obtain copies of 2019, 2018, and 2017 business tax returns or year-end financials to be utilized to determine size standard compliance.
**We at Corporate Solutions Inc. are here to assist you through this process**
**We will be getting this information out to you as soon as we receive the information**
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