Payroll Protection Program (PPP) established by section 1102 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

 

The Paycheck Protection Program offers businesses with less than 500 U.S. employees a forgivable loan of 2.5 times average monthly payroll or 10 million dollars.  The "U.S. employees" in the context of this program means employees who reside in the United States.

 

New stipulation as of the weekend of April 3rd.  

I recommend doing calculations very carefully before you turn in your application. Technically you only get one good bite at the application - meaning if you actually need $350,000 more to make payroll than you thought originally you can't go back for that additional amount, you are set with your original calculations per the new government stipulation.  

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PPP LOAN FORGIVENNESS:

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For some or all of the PPP loan to be forgiven the following must occur:

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- The business must maintain a similar proportion of their payroll and wages.

If you DO NOT maintain a similar proportion of payroll and wages the loans now have a 1% rate and a two-year maturity.  This rate is 50% higher than it was set the week of March 30, 2020

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- Your loan forgivenesses will be reduced if you decrease your employee headcount.

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- Your loan forgiveness will be reduced if you decrease salary and wages by more      

   than 25% for any employees who made less than $100,000 annualized in 2019.

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- 1099 contractors would not be included in the employee count as they are eligible       to apply for their own loans individually.  

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NOTE*  You can rehire individuals!

You have until June 20, 2020 to restore your full-time employment and salary             levels from any changes you made between February 15, 2020 and April 26, 2020.

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75% of your loan amount MUST be used for PAYROLL if you do not want to pay the loan back over the 2-year maturity date.

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Re: Affiliation Problems 

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Affiliation Defined:

Affiliation as defined in the context of this program: 

The controller of the company (this can be an individual or entity) who owns more than 50% of the company's voting shares OR a minority holder of any amount that would be deemed an affiliate IF that minority holder can control the applicant by preventing a quorum or in some way blocking actions by the board or stockholders.

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I recommend searching through your charter, bylaws, or stockholder agreement, etc. to determine if you may have an affiliation problem. 

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Note: There is an exemption to this affiliation rule for religious organizations and non-profit organizations.  

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