TUESDAY, APRIL 7, 2020
There are two types of loans that you can apply for:
- Economic Injury Disaster Loan through the SBA
- Can be used for payroll, fixed debts, accounts payable and other expenses that can't be paid because of the impact of COVID-19
- Maximum loan is $2mil
- 3.75% interest rate
- Loan term can be up to 30 years
- This loan is applied for by going directly to the SBA website, filling out information online and then you will be assigned a SBA lender. https://covid19relief.sba.gov
- THIS LOAN IS NOT FORGIVABLE
- Paycheck Protection Program Loan– THIS IS THE ONE MOST OF US ARE INTERESTED IN!!
- Can be used for payroll expenses, employee salaries, mortgage interest, rent and utilities
- Maximum loan is 2.5 times your average monthly payroll
- 4% interest rate
- No payments required for the first 6 months and then a 10 year loan term.
- This loan is applied for through your bank…NOT the SBA.
- Many banks don't have full information on how they are implementing the program so you may need to keep following up with your bank until they have the information available.
- UP TO 100% IS FORGIVABLE IF USED FOR ITEMS MENTIONED IN THE FIRST BULLET
- Borrowers are entitled to loan forgiveness equal to the sum of the following expenses paid during the eight-week period, which begins on the loan origination date:
- Payroll costs
- Covered utility payments, including electric, gas, water, transportation, telephone, and internet access for which service began before Feb. 15, 2020
- Covered rent obligation, including rent obligated under a leasing arrangement in force before Feb. 15, 2020
- Covered mortgage interest obligation, including a mortgage on real or personal property incurred prior to Feb. 15, 2020
- The loan forgiveness amount will not exceed the amount of the loan.
- Reduction of Forgiveness Amount
- The loan forgiveness amount will be reduced if there is a reduction in the number of Full Time Equivalents (FTEs). This reduction percentage is calculated at the election of the borrower by either of the following:
- Average number of FTEs per month (over the eight-week period) / Average number of FTEs between Feb. 15, 2019, and June 30, 2019
- Average number of FTEs per month (over the eight-week period) / Average number of FTEs between Jan. 1, 2020, and Feb. 29, 2020
- The loan forgiveness amount will be reduced by any reduction in total salary or wages of any employee that is in excess of 25%. This applies only to employees that received a 2019 annualized salary of less than $100,000.
- There is a special rule for a reduction in seasonal employees.
- Employers can mitigate – or eliminate these reductions – if they restore the number of FTEs and total salary by June 30, 2020.
- What can be included for payroll costs?
- Salary, wages, commission, tips, vacation, payments for group health insurance, retirement benefits and state/local taxes on compensation
- What is excluded from payroll costs?
- Compensation in excess of $100K
- Compensation to employee with principal residence outside of the US
- Qualified sick wages or wages paid under the Families First Coronavirus Response Act
- Great reference material that was used to put together this information:
Posted 12:24 PM
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