CARES Act – Paycheck Protection Program Key Summary Points
The Paycheck Protection Program (PPP) under the CARES Act provides funds a business can use to help sustain itself through the financial crisis during the Covid-19 outbreak. This is a loan a business can get via its bank. The eligible loan amount can be forgiven as long as the funds are used for payroll and a few other qualified expenses. This short article addresses some of the key points and timelines a business should know when considering and/or applying for the Paycheck Protection Program under the CARES Act.
Timing on Applying for Funds/Loans under the Paycheck Protection Program (PPP, CARES Act)
When your business can apply for paycheck loans under the Paycheck Protection Program depends on its business structure. For example,
– Starting on April 3, 2020, small businesses and sole proprietorships can apply.
– Starting on April 10, 2020, independent contractors and self-employed individuals can apply.
How to Calculate Your Eligible Amount
To figure out how much you or your business qualifies, you can take the payroll amount from your 2019 taxable year as a baseline. This baseline number is then divided by 12 to get your monthly payroll average. The Paycheck Protection Program covers 2.5 times the monthly payroll average.
Documents Needed to Apply
You or your business will need supporting documents to show how much your “Payroll” was for last year and this year. Payroll has a broad definition which includes, for example, retirement contributions and medical benefits. For further information, contact our firm for a consultation.
You or your business will also need supporting documents to prove you have the same “employees” on Feb 15, 2020, and what their salaries amounts are.
When it is time to apply for loan forgiveness, you will need documents to prove that you have spent the money on payroll.