Four Steps to Take Now for the Paycheck Protection Program
There’s no time to lose. You can submit an application on April 3 for the Small Business Paycheck Protection Program that provides forgivable loans up to $10 million each.
At ecoCFO, we are focusing on guiding clients through the application process, as the funds will go quickly.
The CARES Act includes $349 billion for employers who hire 500 people or less and will pay up to 8 weeks of payroll costs including benefits. Funds can also be used for rent, mortgage payments, utilities, and other debt obligations. The government fully forgive loans for those who use at least 75 percent of the funds for payroll and bring employees back by June 30.
No collateral or personal guarantees are required, and the government will defer loan payments for six months.
The goal of the program is to bring furloughed employees back to work.
While we predict this process will not go smoothly and there may be delays, we still recommend submitting applications as soon as possible. Here are four steps we recommend businesses take if they plan to apply for these loans:
- Reach out to your payroll provider to request the necessary reports and tax filings.
- Call your bank to find out what supporting documentation will be required. Note the federal government has designated the Small Business Administration as the program manager and there is a list participating and approved lenders that will be providing the funds.
- Contact your company’s investors as necessary for the 20 percent owner certifications and list of affiliates, required by the application.
- Collect all necessary data once your bank has notified you of the required documents. Some examples we have seen include:
- Financial statements going back to January 2019
- Evidence of declining cash balances due to the pandemic
- Current employee headcount
- Payroll registers, including information on wages, taxes, and employer portion of benefits, by employee, by month for FY 2019.
While it may seem challenging for small businesses to navigate these uncharted waters, it’s well worth the effort to apply. To learn more about the Payroll Protection Program, visit the US Department of Treasury’s fact sheet.