March 27, 2020Share:
Today, President Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. One of the provisions in the bill provides assistance to small businesses in the form of a loan program that can be used cover payroll costs, mortgage obligations, rent and utilities. If certain employee retention standards are met, a portion of the loan could be forgiven.
Below is a general outline of the Paycheck Protection Program:
• Small businesses with 500 or fewer employees during the “covered period” – February 15 through June 30, 2020 are eligible. Some industries may qualify with more employees, depending on the Small Business Administration’s applicable industry size standards, accessible here.
• Offers a loan of up to $10 million based on a formula, which is essentially 2 ½ times the monthly payroll, plus certain other costs, up to $100,000 per employee.
• Employee count is calculated per location for businesses in the hospitality and restaurant industries and certain others.
• No personal guarantees are required.
• Also available for self-employed individuals.
• Loan may be used for salaries, paid sick or medical leave, insurance premiums, and mortgage rent and utility payments.
• Loans will be made through eligible FDIC lenders.
• Loans will be forgiven if employment and wage levels are maintained. There is a cure period for reductions that occurs between February 15, 2020 and 30 days after date of enactment as long as released employees are rehired or salary reductions are reversed by June 30, 2020.
• Loan forgiveness is not taxable.
Please continue check back for additional updates on the CARES Act. If you have specific questions about how this impacts your business, please reach out to your Wilkins Miller advisor.
Updated 4.1.2020 at 9:30 AM