COVID-19: PPP Loans
Paycheck Protection Program,
EIDL Disaster Loan Recovery
How to Apply, Loan Calculation
The first thing you need to know about PPP loans is that they are not direct loans from the feds. They’re more like an SBA 7(a) loan.
SBA is guaranteeing 100% percent of these loans, but they will be made through SBA-approved lenders. Its important to know that many banks are overwhelmed so we have a list of Banks we have directly been working with to support the needs of our www.bookkeeperlive.com client base.
And your SBA lender will service your loan. Also, PPP loans are in fact “first-come, first-served”.
You can get both EIDL disaster loan and PPP paycheck protection program loans, but their proceeds can’t be used for the same purpose. You can refinance your EIDL loan into a PPP loan.
The CARES Act said that the the full principal amount of the loan and any accrued interest can be forgiven if you use all of the loan proceeds for forgivable purposes and employee and compensation levels are maintained.
Remember, payroll is the priority here — it’s called the Paycheck Protection Program. The whole point of these loans is to keep the lights on in your business and to keep people working.
In light of this, the SBA and the Treasury Department have said that no more than 25% of the loan forgiveness amount may be attributable to non-payroll costs.
The first day to apply for a PPP is, April 3, and this program is running through June 30 or until funds are exhausted.
Now although today is the official “start date” for PPP, most SBA lender banks are not ready, especially the old school brick and mortar banks.
Here are the Eligibility Requirements for PPP Loans:
To calculate your maximum loan amount, take your payroll costs from the last twelve months for employees whose principal place of residence is the United States. Subtract any compensation paid to an employee in excess of an annual salary of $100,000. If you’re a one-man or one-woman show who doesn’t have payroll but just has self-employment income, subtract any of your earnings that are in excess of $100,000 for the last twelve months.
Then you have that number, those total payroll costs less amounts greater than $100,000. Divide that number by 12.
Multiply that new number by 2.5.
Add the outstanding amount of any EIDL disaster loan that you received between January 31, 2020 — that’s when the “disaster” began — and April 3, 2020. This is EIDL received, not applied for. I doubt many of you have actually received an EIDL right now.
The definition of payroll costs for PPP is broad, including:
PPP loan proceeds can be used for:
PAYCHECK PROTECTION PROGRAM (PPP)
ECONOMIC INJURY DISASTER LOANS (EIDL)
CARES Act Paycheck Protection Program SBA Loan Application
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