We hope this message finds you well in this difficult time. We want to provide further explanation for those searching for small business relief through the CARES Act. During this time of uncertainty for both tenants and landlords, landlords may request business owners and tenants to apply for the following program before engaging in further discussions regarding rent deferment.
Below is an important summary of the Paycheck Protection Program (PPP) put together by Katz, Sapper and Miller CPA and Tax Firm in Indianapolis. We have also included a flow chart here for further explanation of small business relief through the CARES Act. Please read as your business is a likely beneficiary.
Paycheck Protection Program (PPP)- part of the Coronavirus Aid, Relief and Economic Security (CARES) Act
What is the Paycheck Protection Program (PPP)?
- Forgivable loans to small businesses to pay their employees during COVID-19 pandemic.
- Loan amounts will be forgiven as long as:
- Loan proceeds are used to cover payroll costs, and most mortgage interest, rent and utility costs over the 8-week period after the loan is made.
- Employee and compensation levels are maintained.
- Payroll costs are capped at $100,000 on an annualized basis for each employee (it is estimated that not more than 25% of the forgiven amount may be for non-payroll costs).
- Loan payments will be deferred for 6 months.
- These loans can be partially or fully forgivable provided certain criteria is met.
- Limited funds so APPLY EARLY.
When Can You Apply?
- Starting April 3, 2020, small businesses and sole proprietorships can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders
- Starting April 10, 2020, independent contractors and self-employed individuals can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders
Who Can Apply?
- All businesses- including nonprofits, veterans organizations, Tribal business concerns, sole proprietorships, self-employed individuals, and individual contractors- all with 500 or fewer employees can apply.
- For the program, the SBA’s affiliation standards are waived for small businesses:
- In the hotel and food services industries; or
- That are franchises in the SBA’s Franchise Directory; or
- That receive financial assistance from small business investment companies licensed by the SBA.
How to Find a Bank That Will Accept Your PPP Application?
- A great place to start is with our current lending institution. If they are not participating in the program, you can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program.
- Some lenders are electing to only process PPP applications for existing clients, but rules vary by institution.
What Do You Need to Do to Apply for the PPP?
- You will need to complete the PPP loan application (attached to this email) and submit the application with the required documentation to an approved lender that is available to process your application by June 30, 2020 (but preferably much sooner).
What Other Documents Will You Need to Include in Your PPP Application?
This information is changing rapidly but here is the updated documentation as of April 1:
- Payroll Costs.
- Monthly payroll reports from payroll provider, which includes the employee federal withholding broken out, for 2019 and 2020 Q1.
- Applicant to provide adjustment for individuals earning greater than $100k, based upon annualized wages.
- Supporting documentation for payments for group health care benefits (includes coverage, claims paid, TPA costs, etc.) monthly for 2019 and 2020 Q1, examples of supporting documentation could include invoice copies and proof of payment.
- Retirement funding supporting documentation monthly for 2019 and 2020 Q1, examples of supporting documentation could include invoice copies and proof of payment.
- State or local tax assessed on the compensation of the employee, for example, state unemployment tax paid by the company monthly for 2019 and 2020 Q1.
- Summary of 1099 independent contractors for 2019 and 2020 Q1.
For more information, please check out Katz, Sapper and Miller’s COVID-19 Resource Center.
Latitude Commercial provides commercial real estate services such as purchasing, leasing, landlord representation, tenant representation, and property management throughout Northwest Indiana and the Chicago Suburbs. To find out how we can help you find a new home for your business, call us today at (219) 864-0200.