Download: Paycheck Protection Program: Official Guidance from the U.S. Treasury

Download: Paycheck-Protection-Program-Frequently-Asked-Questions

Covered Period:

March 1, 2020 – December 31, 2020

Who is eligible?

Any business or concern, public or private not-for-profit organization which employs no more than 500 employees, or if you are self-employed.

Who is administering these loans?

These loans will be administered by banks, not the Small Business Administration.

Do I have to personally guarantee this loan?

You do not have to personally guarantee this type of loan

What can the Payroll Protection Loan be used for?

  • Payroll supports, including paid sick, medical, or family leave, and costs related to the continuation of group health care benefits during those periods of leave
  • Employee Salaries
  • Mortgage Payments
  • Rent (including rent under a lease agreement)
  • Utilities
  • Any other debt obligations that were incurred before the covered period

How much can I borrow?

Up to 2.5 times your average monthly payroll costs. This figure includes gross wages, commissions, paid time off (except for wages that fall under the Paid and Family Medical Leave that are already reimbursable), health insurance benefits, retirement benefits, and any local and state taxes the employer pays on behalf of employees.

What’s not clear as of this writing is which period will be considered in calculating your average monthly payroll costs for businesses that have been in business for at least one year. For businesses that have not been in operation for a full year, your average monthly payroll costs will be calculated using the months of January and February 2020.

How do I pay back this loan?

After using your loan to pay wages, benefits, mortgage and utilities, go back to the bank where you took out the loan. If you can provide documentation, including payroll records and receipts for the qualified items you used the loan to pay for, AND if the total you paid equals the amount of the loan, the program forgives your entire loan.

In addition, you will still get to expense the wages and qualified expenses on your tax return, and the forgiven portion of the loan will not be treated as taxable income.

Keep in mind, you must have the same number of full-time employees or equivalents from February 15, 2020 until June 30, 2020 as you had for the same time in 2019. If you reduce your staff numbers or reduce wages by more than 25%, you won’t receive as much loan forgiveness.

If you have already reduced your staff and/or reduced wages by more than 25%, as long as your staff is rehired or their wages are restored to their normal level on or before June 30, 2020, you can still receive full forgiveness of the loan.

What if I’m self employed?

The loan works basically the same way as it does for employers, but you will have to have your 2019 Schedule C to get this loan. Take the bottom line of your Schedule C, divide that number by 12, and then multiply it by 2.5 to get your loan total. What we don’t know yet is how loan forgiveness would be calculated.

What if I don’t use the full amount of the loan?

You won’t have to return the money immediately; the remaining balance is put into forbearance for a 6 month term, and at the end of the forbearance term, the loan becomes a 2-year term at a 1% interest rate.

Download: US Chamber PPP Checklist



The professionals at Harris, Hardy & Johnstone, P.C. are here to help guide you through this process to determine if you qualify for a Paycheck Protection Loan, and how to apply for one.

Please reach out to us today to get started!