If you’re not a criminal, not a liar, not in legal trouble, play by the rules, face economic uncertainty, and would like to have your payroll/rent paid for by someone else for ~8 weeks then continue reading about your new best friend called PPP
The Paycheck Protection Program or PPP is a loan that can be forgiven. Yes, it’s less of a loan and more of a grant. To be abundantly clear that means it’s money you can likely keep and never be required pay back.
It’s targeted towards small businesses (500 employees or less). That’s us.
PPP is generally intended to cover your payroll costs. Payroll costs include company retirement benefits, employer payroll taxes, group health insurance. It can also be used to cover rent and utilities.
For most of us you look at your average monthly payroll from 2019. You exclude costs over $100,000 on an annualized basis for each employee. You add the payroll costs as mentioned above then you multiply that number by 2.5x. That’s the amount of money you can ask for, receive, and, if tracked properly, have forgiven.
For a lot of you reading this article that will mean a cash injection of over $100k. This is not something to take lightly. This is not a scheme or a complicated application. It’s a legitimate attainable and likely outcome for many businesses.
The application is two pages and can be completed in about 10 minutes or less.
You will need to assert, among other things, that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the applicant”. You will have to interpret that language yourselves but it looks like that will apply to a substantial number of businesses.
You will have to use the secured money for payroll, covered rent, and covered utilities. That means you're not going to squirrel it away somewhere. You will also need to maintain a similar headcount of employees and not reduce payroll below 25% of what it is. So if you take the money and fire a bunch of employees you’re likely to have to pay a lot or all of the PPP loan back+. There’s a bit more to it so read the application and the treasury information about the program, I’ve included the links below.
Remember this is brand new information so things are changing but the main points appear to becoming clearer by the day. There are application deadlines so this is not something to wait on.
Each and every one of our GLM members should be evaluating the submission of a PPP application.
The government links:
Treasury link about PPP
SBA link to loan application: