The Department of Treasury has released the first information on the SBA loan program related to the CARES Act.
We understand from SBA lenders that there is still a lot of work to do and guidance needed from the Treasury Department.
On our end, we are actively monitoring, meeting and reviewing all of this information and commit to being ready to advise and guide you through this process.
What is PPP?
One of the provisions of the 2020 CARES Act is the Paycheck Protection Program (PPP) where businesses will receive loans meant to help support payroll during the period February 15, through June 30, with 100% federally guaranteed loans, if they maintain their payroll during this emergency.
If the employer maintains its payroll, then the portion of the loan used during the covered period for eligible payroll costs, interest on mortgage obligations, rent, and utilities would be potentially forgiven on a tax-free basis.
Get more details in our recent article: Stimulus Bill Gives Small Businesses $377B in Loans to Retain Employees
Who is eligible?
You should be if you are an employer with fewer than 500 employees.
What do we know now?
- The Department of Treasury is working on regulations and just yesterday released the application and some supplemental information – It can be found here. While this is the application provided by the SBA, keep in mind that some of the lenders may use/require a different format (e-forms, etc).
- Additional regulations and guidance are expected later this week.
- Treasury released the application this afternoon – you can access it here. Applications cannot be submitted prior to Friday.
- Lenders are working vigorously with the SBA to be ready to administer these loans for you, but they do not have all the guidance just yet.
What can you be doing right now to prepare?
- Contact your lenderto let them know that you will be applying for this loan and find out what they recommend as current next steps.
- Open a bank accountinto which you will deposit these loan proceeds once the loan is funded; this will keep the funds segregated from general operating funds, and from this account you will pay only eligible costs.
Begin gathering the following information in preparation for the application process – please note that the list of necessary documents is NOT yet known, and as such, this list is subject to change.
- Articles of organization/incorporation for all business entities
- 2019 State unemployment tax return (all quarters) from your payroll company
- 2019 Payroll summary and listing of employees who earned more than $100,000
- 2019 Form W-3 from your payroll company
- 2019 Forms 940 and 941 (all quarters) from your payroll company
- Cost of health insurance premiums for 2019
- Cost of employer contributions to retirement plans in 2019
- You may also want to have a current personal financial statement and your last three years business tax returns ready.
Jane Spradlin, CPA, is a shareholder at Concannon Miller, a CPA and business consulting firm in Hanover Township, Northampton County. She can be reached at firstname.lastname@example.org