Businesses throughout the world are being heavily impacted by our current state of lockdown. In an effort to relieve some financial burden on small businesses the U.S. Federal Government approved a $2 trillion federal stimulus package known as CARES act.
As part of the CARES act passed in late March, Congress allocated $359 billion for small-business relief. PPP enables businesses to get loans of 2.5 times their average annual “payroll costs” and have those loans forgiven if they spend at least 75% of those funds on “payroll costs” within eight weeks. It’s designed to get paychecks to those working in small businesses quickly. It immediately became a very, very popular program.
Highlights of the Paycheck Protection Program (PPP):
- The program provides cash-flow assistances through federally guaranteed loans to employers who maintain their payroll through this national emergency
- Six months deferred payments
- Rate: 1%
- Loans can be up to 2.5x your average monthly payroll expenses (up to $10 million)
- And perhaps most importantly, businesses are eligible to have their loans COMPLETELY FORGIVEN
Hotel and restaurant businesses with fewer than 500 employees in one location also qualified for these funds – up to $10 million. Sole proprietors who do their own bookkeeping or small businesses fighting just to survive use the same applications and compete for funds with hotel or restaurant chains. Crazy.
PPP loans will be given on a first-come, first-served basis. We’re hearing that if all qualified businesses apply for this loan program, there may only be enough federal funding to cover 30% of those businesses.
Applications will take 15-30 days to process, approve and fund.
We actively encourage all small business owners to take advantage of the programs that are available, while they are still an option.