08 Aug 2020
5 minutes read
The coronavirus pandemic is undoubtedly the biggest blow to humankind in the past century, and it has brought along with it a series of economic and social disruptions, which have rendered millions around the world homeless or jobless, thus taking a toll on their wellbeing and mental health.
In an attempt to make things better, the Federal Government of the United States came up with the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act on March 27, 2020. This was followed by an allocation of $350 billion which is meant to facilitate small businesses into sustaining their employees and their families.
One of the many features of the CARES Act is the Paycheck Protection Program or PPP for short. The program is designed around federally guaranteed loans which are backed by the Small Business Association and will be disbursed to small businesses to help fund the workers’ paychecks for at least eight weeks.
Another $310 billion was fueled into the act, by way of the Paycheck Protection Program and Health Care Enhancement Act. This ensured that the businesses that missed out during the first round of funding can get a second chance. This allows a large number of small businesses to ensure payment for their workers for some time.
One of the key aspects of the Paycheck Protection Program is its forgiveness clause, which allows the loan to be waived off if, and only if, a majority of the funds go towards payroll costs. This is a saving grace for small businesses, who are already struggling to make ends meet.
The Paycheck Protection Program offers small businesses the valuable opportunity to turn their loan into a federally approved grant. However, the forgiveness clause comes with a few strict guidelines which need to be followed. For starters, it is imperative that 60 percent of the entire loan should be spent on funding the employees’ payroll and benefits.
The remaining 40 percent of the PPP loan can be used for covering business costs, such as mortgage payments, rent or lease payments, and utilities.
To receive the loan for your business, it must fall in one of the following categories:
There are a few exceptions to this list, such as businesses in the hospitality and restaurant industries that have more than 500 employees, but not more than 500 employees at a single physical location.
The Paycheck Protection Program is a lifesaver for small businesses, who don’t have much to fall back on. However, as helpful as it may seem, it is seemingly impossible to provide economic support to each and every small business in the US. The only hope is for the pandemic to disperse and normalcy to resume so that companies can find their economic footing again.
Contact us at Support@DDBusinessAnalyst.com to explore the second draw and the forgiveness application.