COVID-19 Relief Package Clarification – IAM
April 07, 2020
Business & Financial Assistance Related
For companies whose operations have been curtailed or otherwise impacted by COVID-19 related restrictions, several clarifying guidance and forms were issued over the weekend, connected to programs created under the first three legislative relief packages to pass the Congress.
An overview of the latest forms and available information is below:
Paycheck Protection Program (PPP)
The PPP provides a direct incentive for small businesses to keep workers on their payroll – this program is commonly referred to as “the forgivable loan” (should certain conditions must be met). The U.S. Small Business Administration (SBA) will administer the program, and forgive loans for employees kept on the payroll for eight weeks – provided the money is used for payroll, rent, mortgage interest or utilities.
You can apply through any existing SBA 7(a) lender or through any federally insured depository institution, credit union or 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. You should consult with your local lender as to whether they are participating in the program.
The Treasury Department issued updated information announcing rules surrounding the PPP loan program. You can also access new application forms from the Treasury Department for borrowers and lenders participating in the program. Eligible lenders are processing applications now. The PPP will be available through June 30, 2020.
Economic Assistance Disaster Loan
The SBA is also overseeing loans of up to $2 million for businesses with 500 or fewer employees. Loan terms would be determined on a case-by-case basis, with a 3.75% interest rate for small businesses and a 2.75% interest rate for nonprofits. Click here to learn more about the program and eligibility requirements.
In addition, the Internal Revenue Service is offering no penalty options to defer (but not eliminate) employer submission of payroll taxes. There is also an opportunity for companies with under 500 employees to file for a refundable tax credit, to defray costs as they provide required paid family leave.
Please Note – Guidance should not be substituted for legal or financial advice. We encourage all companies to confer with their tax and legal counsel prior to entering any loan application or similar process, as entering these agreements often precludes eligibility in other programs, that may be more suitable for your companies’ needs.