Understanding the Paycheck Protection Program (PPP)
The Paycheck Protection Program (“PPP”) started with a bang, approving loans totaling $349 billion, which have been or will soon be funded. In response to the overwhelming demand, Congress and the White House are close to approving an additional $250 billion for more PPP loans.
Many questions have been raised regarding the PPP, and this Client Alert aims to address several of the issues brought up by Gesmer Updegrove clients.
Key Issues Addressed:
1. Eligibility Criteria for Paycheck Protection Program:
- Initial Criteria: Businesses with 500 or fewer employees were initially eligible, but recent updates have added more specific requirements and thresholds, including revenue reduction and industry-specific standards.
- Temporary Changes: For a two-week period, only businesses with fewer than 20 employees are eligible to apply for PPP loans, ensuring that the smallest businesses receive the support they need.
2. Loan Calculation for Sole Proprietors and Independent Contractors Regarding Paycheck Protection Program:
- The SBA has announced changes to the way it calculates the size of PPP loans for sole proprietors, independent contractors, and the self-employed. This new method aims to make loan amounts more equitable and reflective of the actual financial needs of these applicants.
3. Use of Loan Funds in the Paycheck Protection Program:
- Eligible Expenses: PPP loans can be used for payroll costs, rent, utilities, and other essential expenses. Businesses must adhere to these guidelines to qualify for loan forgiveness.
- Forgiveness Criteria: To have the loan forgiven, businesses must maintain their workforce levels and use the loan funds for eligible expenses within a specified period.
4. Application Process:
- Businesses must prepare necessary documentation, including financial statements and payroll records, to apply for PPP loans. It is crucial to ensure all information is accurate and complete to expedite the application process.
Additional Resources and Assistance
For more detailed information on these updates and how they may affect your business, please refer to our latest Client Alert. At Gesmer Updegrove LLP, we are committed to providing our clients with timely and relevant information to help them make informed decisions. Our experienced attorneys, including Joe Laferrera, Aaron Kriss, and Sean Gilligan are available to assist with any questions or concerns regarding PPP loans and the application process.
We are dedicated to supporting our clients through these challenging times and ensuring they have access to the resources needed to sustain and grow their businesses. Please do not hesitate to reach out to us for personalized advice and support.