Explaining the second wave of funding for the Paycheck Protection Program (PPP)
Of the $484 billion in the latest stimulus package approved by Congress and signed into law by President Trump, some $310 billion will fund the second round of the Paycheck Protection Program (PPP).
According to the U.S. Treasury PPP Fact Sheet, here’s what borrowers need to know:
What do I need to apply?
You will need to complete the Paycheck Protection Program loan application and submit the application with the required documentation to an approved lender that is available to process your application by June 30, 2020. Click HERE for the application.
What counts as payroll costs?
- Salary, wages, commissions, or tips (capped at $100,000 on an annualized basis for each employee);
- Employee benefits including costs for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal; payments required for the provisions of group health care benefits including insurance premiums; and payment of any retirement benefit;
- State and local taxes assessed on compensation; and for a sole proprietor or independent contractor: wages, commissions, income, or net earnings from self-employment, capped at $100,000 on an annualized basis for each employee.
Does the PPP cover paid sick leave?
Yes, the PPP covers payroll costs, which include employee benefits such as costs for parental, family, medical, or sick leave. However, it is worth noting that the CARES Act expressly excludes qualified sick and family leave wages for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act (FFCRA) (Public Law 116–127).
What about loan forgiveness?
Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs. Your loan forgiveness will also be reduced if you decrease salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019.
For more information on the Paycheck Protection Program, read the U.S. Treasury Department’s complete fact sheet.