#039: COVID-19 SBA Paycheck Protection Program Explained

In a matter of weeks, the coronavirus oftentimes referred to as COVID-19, has dramatically changed life as we know it around the world. Large hotel chains and restaurants have laid off or furloughed hundreds of thousands of employees. For many small business owners, adjusting to "stay-at-home" mandates has dramatically hurt business and some fear they may never recover.

There is good news however. The Coronavirus Aid, Relief, and Economic Security (CARES) Act allocated $350 billion in forgivable loans to help small businesses stay afloat during the COVID-19 crisis.

Larry Campbell, a CPA at the San Diego-based Lavine, Lofgren, Morris & Engelberg, LLP, joins the Talk Wealth To Me crew for an explanation on what exactly the PPP program is, who benefits from it, the conditions on the loans, and more.

WHO QUALIFIES?

Small businesses with 500 or fewer employees can apply for loans through the Paycheck Protection Program (PPP).Small businesses in the hotel and food-service industries, including franchises, may qualify even if they have more than 500 employees.One loan is granted per business. A taxpayer identification number is required.

HOW MUCH CAN I GET FROM THE PPP?

The maximum loan amount is $10 million under the PPP.The amount of money a small business will be eligible for is dependent on how long they remained operable between February 15 – June 30, 2020, and how much they spend on payroll.The maximum loan amount will be 250% of the average monthly payroll costs during that period.Businesses that were not open or out of business after February 15 will receive a maximum loan amount 2.5 times their average monthly payroll expenses for both January and February.

WHAT ELSE SHOULD I KNOW ABOUT THE PPP?

All loans have a 1% fixed interest rate

 
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