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UPDATED JUNE 4, 2020- Small Businesses Receive More Relief under SBA Paycheck Protection Program by Joseph Leuchter, CPA


Posted on June 04, 2020 by Joseph Leuchter

The Paycheck Protection Program and Health Care Enhancement Act, signed into law on April 24, earmarks an additional $320 billion for the Small Business Administration’s (SBA’s) highly sought-after PPP, which exhausted all its initial $349 billion in funding in less than two weeks. One reason for the program’s popularity is that it enables borrowers to qualify for loan forgiveness when they retain workers and use loan proceeds to cover payroll costs, rent, utilities and mortgage interest during the eight-weeks after they receive funding. Unforgiven amounts are payable over five years at an interest rate of 1.0 percent.

The PPP was developed to provide immediate financial support to eligible small businesses, including independent contractors, sole proprietorships, partnerships, nonprofits, veteran’s organizations and tribal businesses. These SBA-backed loans are intended to help businesses maintain their workforce and keep their entities operating through the covered period. When borrowers use at least 60 percent of those funds for payroll costs during the 24-week covered period, they may qualify for forgiveness of up to 100 percent of the loan principal.

There is little doubt that the second infusion of funding to the PPP will go as quickly as the first round. Businesses that have already submitted loan applications should check with their lenders to determine if they need to reapply or if their requests were put into a queue that can now be reviewed.

In addition to shoring up the PPP, this fourth package of government stimulus for COVID-19 relief also set aside $60 billion for small banks, credit unions and other small lenders to extend PPP loans to those in need. Of that amount, $10 billion has been allocated for small business grants of up to $10,000 for disaster relief, with another $50 billion going to the SBA’s Economic Injury Disaster Loan (EIDL) program, which provides small businesses with working capital loans of up to $2 million.

About the Author: Joseph C. Leuchter, CPA, is a senior manager in the Tax Services practice of Berkowitz Pollack Brant Advisors + CPAs, where he helps individuals and businesses grow their wealth and profits while maintaining tax efficiency and compliance. He can be reached at the CPA firm’s Miami office at (305) 379-7000 or via email at info@bpbcpa.com.