Received your PPP? Congratulations.
Here’s what you need to know:
MAXIMUM LOAN/GRANT AMOUNT:
2.5 times average monthly “payroll costs” over previous 12-month period or from calendar year 2019 (up to $10M).
Seasonal businesses can use February 15, 2019 or March 1, 2019 through June 30, 2019 as the time period to calculate average monthly payroll costs
“Payroll Costs” INCLUDES:
Salary, wage, commission, or similar compensation
Cash tips or the equivalent (based on employer records of past tips or, in the absence of such records, a reasonable, good-faith employer estimate of such tips)
Self-employment income of general active partners (and LLCs filing taxes as a partnership) of up to $100k, annualized
Vacation, parental, family, medical, or sick leave payments
Separation allowance
Payment required for the provisions of group health care benefits, including insurance premiums
Payment of any retirement benefit
State or local tax assessed on employee compensation
For sole proprietors or independent contractors, “payroll costs” includes wages, commissions, income, net earnings from self-employment, or similar compensation of $100k
“Payroll Costs” EXCLUDES:
Compensation of any employees or partners in excess of $100k annual salary (prorated for the applicable period; exclusive of employer retirement plan contributions, group health care costs, and state and local taxes assessed on employee compensation)
Employer’s share of federal payroll taxes
Compensation of employees with a principal place of residence outside of the U.S.
Payments to an independent contractor or sole proprietor
Qualified paid sick leave or paid family leave where a tax credit is allowed
If business started after June 20, 2019, SBA will look at January and February 2020.
Borrower utilizing a PEO to process payroll and report payroll taxes should obtain a statement from the PEO documenting the amount of wages and payroll taxes. In addition, employees of the eligible borrower will not be considered employees of the payroll provider or PEO.
FUNDS MUST BE USED FOR:
“Payroll costs”
Costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums
Employee salaries, commissions, or similar compensations
Owner compensation replacement
For self-employed individuals (who file Form 1040 Schedule C), allowable uses are limited to those for which the borrower made expenditures in 2019
Mortgage interest
Rent (including rent under lease agreement)
Utilities
Interest on any other debt obligation incurred prior to covered period
Refinancing an SBA EIDL loan made between January 31, 2020 and April 3, 2020
Allowable uses are during a time period ending June 30, 2020
No more than 25% of the forgiven amount may be used for non-payroll costs
If PPP funds are misused, SBA will direct repayment. Knowingly using funds for unauthorized purposes may be subject to serious penalties including fraud charges, up to thirty (30) years prison, up to $1M fine.
And if you’re in need for some specific insight tailored for your business, then contact me. A lot of our members are doing extremely well in this environment. To know where the opportunities are, set up a call with me today.