CARES ACT Small Business Paycheck Protection Program Presented by: Lytkowski & Co., Inc. MDNA William M. Dutton, CPA, CFE John Greene, President jgreene@flsales.com wmdutton@lytkowski.com
➢ Provides small businesses (500 or fewer employees) with funds to pay up to 8 weeks of payroll costs, including ➢ Salary ➢ Health care/insurance premiums ➢ Wages ➢ Retirement benefits ➢ Commissions ➢ State and local taxes ➢ Tips assess on compensation ➢ Vacation ➢ Mortgages ➢ Parental/Family benefits ➢ Rent ➢ Medical/sick leave ➢ Utilities WHAT IS IT?
➢ The maximum loan amount is the lesser of – ➢ $10 million, or ➢ Up to two months your average monthly payroll costs from the last year plus an additional 25% ➢ The March 31, 2020 SBA materials state that the formula is two times average monthly payroll costs plus an additional 25%. The application form says 2.5x. HOW MUCH CAN I BORROW?
➢ Yes, as long as ➢ You use it for the previously mentioned items ➢ Employee and compensation levels are maintained ➢ Payroll costs are capped at $100,000 on an annualized basis for each employee IS THE LOAN FULLY FORGIVEN?
➢ You will owe a balance on your loan if – ➢ Funds are used for anything other than ➢ Payroll costs, including benefits ➢ Interest on any covered mortgage obligation incurred before February 15, 2020 ➢ Rent obligations on lease arrangements in force before February 15, 2020 ➢ Utility payments for which service began before February 15, 2020 ➢ Forgiveness limits ➢ May not exceed the loan amount ➢ Reductions for decreases in full-time employee head count ➢ Reductions for more than 25% reduction of salary or wages of employees paid less than $100,000 on an annualized basis in 2019 ➢ Rehire/Restoration limit ➢ You have until June 30, 2020 to restore your full-time employment and salary levels for any changes made between February 15, 2020 and April 26, 2020 LOAN FORGIVENESS EXCEPTIONS
➢ You can submit a request to the lender that is servicing your loan. ➢ You will need to submit documents to verify ➢ Employees and pay rates ➢ Payments on the eligible mortgage/lease ➢ Utility obligations HOW CAN I REQUEST FORGIVENESS?
➢ April 3, 2020 for small businesses and sole proprietorships ➢ April 10, 2020 for independent contractors and self-employed individuals WHEN CAN I APPLY?
➢ Through any existing SBA lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System Institution that is participating ➢ A full list is available at www.sba.gov WHERE CAN I APPLY?
➢ All businesses, with 500 or fewer employees, including ➢ Nonprofits ➢ Veterans organizations ➢ Tribal business concerns ➢ Sole proprietorships ➢ Self-employed individuals ➢ Independent contractors WHO CAN APPLY?
➢ Complete the Paycheck Protection Program loan application ➢ Submit with required documents to an approved lender no later than June 30, 2020 ➢ All loans are initially 100% approved by the SBA WHAT DO I NEED TO APPLY?
➢ The deadline to submit applications is June 30, 2020 ➢ The funding cap on the program is $349 billion HOW LONG WILL THE PROGRAM LAST?
➢ Loan terms are the same for everyone ➢ Interest rate – 0.50% fixed rate ➢ Payments are deferred for 6 months, however, interest will continue to accrue over this period ➢ Loan due date – 2 years from date of inception ➢ Prepayment penalty - $0 ➢ No borrower or lender fees payable to the SBA ➢ No need to prove credit is not available elsewhere WHAT ARE MY TERMS?
➢ No. Nor do you need to personally guarantee the loan. ➢ If you do, however, use the funds for fraudulent purposes, the U.S. government will pursue criminal charges against you DO I NEED TO PLEDGE COLLATERAL?
QUESTIONS?
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