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Paycheck Protection Program

The PPP is a new loan program for small businesses, designed to provide short-term cash flow assistance to deal with the economic impact of the COVID-19 pandemic. Loans are made by lenders certified by the Small Business Administration (SBA) and guaranteed by the federal government.

Eligible employers Businesses with less than 500 employees
  • Businesses with 500 or fewer employees (full and part-time) are eligible. Eligible small businesses also include non-profits, sole-proprietors, independent contractors, or other self-employed individuals.
Use of loan funds Businesses that receive loans under the PPP must use loan funds to pay
  • Payroll costs
  • Interest on Mortgage obligations
  • Rent
  • Utilities
  • Interest on debt incurred prior to obtaining the loan
Loan forgiveness Up to 100% of the PPP loan is forgivable provided employers maintain specified employment and wage levels
  • At least 75% of the forgiven amount must have been used for payroll
  • Businesses must maintain their employees and pay them at least 75% of their prior year compensation
  • Other retention requirements apply
  • Loan proceeds may not be used to pay
    • Wages exceeding $100,000 per employee (prorated for the covered period)
    • Employees who live outside the U.S.
    • FFCRA paid sick or family leave wages for which credit is allowed
  • Employers that receive PPP loan forgiveness are not permitted to continue to defer employer Social Security (FICA) taxes.
  • Employers that receive the Employee Retention Credit for Closures Due to COVID-19 are not eligible for the PPP.

Businesses should work with an experienced financial advisor to carefully review assistance programs in order to evaluate the interaction between the available options and determine the best option for their specific circumstances.

Additional information on the PPP can be found at:
     SBA - Paycheck Protection Program
     Paycheck Protection Program I nformation Sheet

This information is only a brief summary and provided as a courtesy to assist in your understanding of the subject matter covered and on the impact of certain regulatory requirements and should not be construed as tax or legal advice. Such information is by nature subject to revision and may not be the most current information available.

Consult experienced counsel and/or tax advisors for legal advice prior to implementing any credit strategies related to COVID-19 relief efforts.
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