In less than a month, the coronavirus pandemic has significantly impacted our society and our economy. The government has acted to help, recently passing legislation to aid entrepreneurs just like you. Whether you’re a practicing dentist, self-employed, or have a brick-and-mortar business, Bryant Consultants wants to explain the Paycheck Protection Program and how it could help you and your business.
Paycheck Protection Program
The Paycheck Protection Program (PPP) represents one of the greatest assets for small business owners in the new relief package. Included as part of the Keeping American Workers Paid and Employed Act, the PPP authorizes up to $349 billion in emergency loans that are earmarked for small business owners, entrepreneurs, contractors, and the self-employed. These loans have two objectives: help businesses cover their operating expenses while they weather the worst portion of the crisis, and to give businesses incentive to retain and pay their employees throughout the pandemic.
Let’s take a look at some of the specifics of the Paycheck Protection Program:
- Loans cover the period from Feb. 15 through June 30 in 2020.
- The maximum loan amount allowed equals two months of your average monthly payroll from the previous year, plus an additional 25 percent, with a firm maximum of $10 million.
- Only 25 percent of the loan amount can be used to cover non-payroll costs.
- Borrowers can use the loan to cover payroll, health care benefits, utility payments, mortgage, rent, and interest on other debt obligations incurred prior to Feb. 15, 2020.
- Loan recipients will be eligible to have their debt forgiven if the loan is used for payroll, mortgage, rent, and utility costs, within eight weeks of receiving the funds.
- Payments on these loans will be deferred for six months.
- Interest on the loans is at a fixed rate of 1 percent, and the loan must be repaid within two years unless you use all of the money for the aforementioned purposes within eight weeks.
- No collateral is required, and there is no personal guarantee requirement.
How can the Paycheck Protection Plan help my business?
The loan is intended for small businesses, 501(c) non-profits, Tribal businesses, and veteran’s organizations with less than 500 total employees, counting full-time and part-time employees, as well as independent contractors. The Small Business Administration has additional details on regarding business size standards.
The Small Business Administration is waiving affiliation standards for:
- Small businesses in the hotel and foodservice industries
- Franchises in the SBA Franchise Directory
- Businesses that already receive financial assistance from small business investment companies that have been licensed by the SBA
In order to qualify for loan forgiveness, a business needs to maintain its pre-pandemic level of employment. If you have already been forced to cut staff prior to applying for the loan, the PPP has a clause allowing debt forgiveness if staffing is expanded to pre-pandemic levels by June 30, 2020.
When can I apply?
Small businesses and sole proprietorship’s can apply as of April 3, 2020. Independent contractors and self-employed persons can apply for their loans starting April 10, 2020. The program remains open until June 30, 2020, but since there is a funding cap and these loans are available on a first-come, first-serve basis, we advise you to apply as soon as possible.
Where can I apply?
Loan applications can be processed through any Small Business Association lender, federally insured depository institution, federally insured credit union, or Farm Credit System institution that is participating. Visit the Small Business Administration for a full list of qualified lenders.
What do I need to apply?
A completed copy of the loan application, which is available online, and payroll documentation. Bryant Consultants has combined a checklist for owner dentists to use for compiling their documents for this application.
What costs can a loan under the PPP cover?
- Payroll costs, including salary, wages, commissions, tips
- Employee benefits such as parental, family, medical, retirement, and sick leave
- Allowance for separation and/or dismissal
- Payments for group healthcare benefits, including insurance premiums
Can the loans be forgiven?
Yes, if used exclusively for payroll, mortgage interest, rent, and utilities for the eight weeks after receiving the loan. The loan will not be forgiven unless you maintain your current staffing and payroll. If you made staff cuts prior to applying for the loan, due to the pandemic, then you have until June 30 to restore both employment and salary levels.
It can be overwhelming to understand every aspect of the relief options available to small businesses. The experts at Bryant Consultants can help. We continue to provide consultation, training, and coaching and will continue to post relevant updates regarding the coronavirus pandemic. Contact Bryant Consultants directly by calling (877) 768-4799. To ensure that you receive the latest updates, please follow us on Facebook and Instagram.
