Paycheck Protection Program Extended to August 8th, 2020
On the evening of Tuesday, June 30th, the US Senate voted unanimously to extend the Paycheck Protection Program (PPP) through August 8th, 2020. That is a 5-week extension to the program.
The PPP was introduced as a way for small businesses, as well as other self-employed workers, to mitigate the negative economic effects of the COVID-19 pandemic. To date, about $520 Billion in funds have been allocated to different businesses.
The first round of PPP funds quickly ran out, as businesses eagerly applied for assistance amid the harsh impacts of widespread quarantine measures. The second round of PPP assistance began in late April and the Small Business Administration (SBA) was set to stop the program at 11:59 pm EST on June 30th, which was thought to be enough time for the economic recovery of small businesses when the PPP was originally drafted.
Who can apply for a PPP loan?
Small business owners
- Generally, those with 500 employees or fewer, but some exceptions exist so read the full details on the SBA website Self-employed
- Sole proprietors
- Independent contractors
- Gig economy workers
- Single-member LLCs
Are there still enough funds in the PPP?
According to The Wall Street Journal, as of the first week of July, approximately $130 Billion remain undistributed.
So, yes, if you think you need financial assistance, there is money left in the program.
How much money can you receive from the PPP loan?
Small business owners can use the SBA loan calculator to get a better idea of a loan amount.
Sole proprietors (and other self-employed individuals) can receive a loan amount that is based upon their salary, up to $100k per annualized period.
But, one important caveat is that 2019 earnings come into play as well.
When determining how much money you can receive, you have to include 2019 business earnings. If, for example, you made $50,000 in 2019, you have to calculate an equivalent 8-week salary based on that $50,000 mark. You can’t receive more than 1.25 times of that amount from the PPP loan. For more details, you can reference SBA’s Additional Eligibility Criteria and Requirements for Certain Pledges of Loans.
For the answer to many other questions, read the PPP Loan Forgiveness FAQs.
What else is important to know about the PPP loan?
The loan is eligible to be fully forgiven if:
- At least 60% of the loan is used to cover payroll expenses over the first 24 weeks after the loan is received
- If the remaining money is used for qualified, ‘non-payroll’ expenses such as business-related mortgages, rent, utilities, or transportation
If the above threshold isn’t met, then the portion of the loan that was not used for forgivable expenses will need to be repaid at an interest rate of 1%.
Please note that Bank lenders may establish their own additional criteria. Please make sure to check with your lender.
Visit Azlo’s COVID-19 (CARES Act) Paycheck Protection Program FAQs, the SBA website for full loan details, read a PPP fact sheet, find a lender, and to learn about what is needed to apply.
You can download a PPP application here and submit it to a lender.
Check out the Azlo PPP loan forgiveness webinar and PPP forgiveness FAQs article to learn more about what is needed to have the loan forgiven. Sole proprietors can reference our blog post on Paycheck Protection Program and Loan Forgiveness for Sole Proprietors.
Also, log in to your Azlo account and look for the COVID-19 lending options link. And, of course, we’re here to help with any questions. You can reach us at 844-295-6466 or email firstname.lastname@example.org.
Hi there! This post exists to offer you (hopefully) useful information but it cannot take the place of personalized professional advice. Please consult a qualified expert if you have questions about your business. Also, Azlo doesn’t endorse any third-party sites that are linked here.
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