Paycheck Protection Program helps small businesses retain employees

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Paycheck Protection Program helps small businesses retain employees

Thu, 04/02/2020 - 11:08
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Congress recently passed the $2.2 trillion CARES Act, which is intended to help smallbusiness owners and individuals survive the impact of the coronavirus pandemic and the resulting disruption of commerce.

One key portion of the federal stimulus package—the Paycheck Protection Program (PPP)—enables small-business owners to continue paying employees. The program provides up to $10 million in loans to businesses with fewer than 500 employees—loans that can be used to help defer the costs of adding employees or keeping employees on the payroll.

The amount a business can receive is based on the total average monthly payrolls costs for the last year multiplied by 2.5, and is contingent upon the business remaining open and retaining its employees. The entire loan can be forgiven.

Small businesses and entities in rural and underserved areas are given priority for these loans.

The program can be used to cover:

•Salaries or wages, payments of cash tips.

•Vacation, parental, family, medical. and sick leave.

•Health and retirement benefits.

•State and local taxes.

Eligible payroll costs may not include annual compensation in excess of $100,000 for individual employees. The loan recipient must be used to support ongoing operations, to retain workers and maintain payrolls, or to make mortgage, lease, and utility payments.

Among those stipulations for loan forgiveness are the following: the business owner must maintain the same number of employees—or more—as in the previous year, and the pay of any employee cannot be reduced by more than 25 percent.

Because it is an emergency program, the application process will be expedited. SBApreferred lenders should begin taking applications next week.

The regulations on this new program are still being finalized, so it is recommended you talk to your banker about specific details. Most area banks—including Happy State Bank, Wellington State Bank, and InterBank in Canadian—have already indicated their interest in participating.

To learn more about the program, go online to https://www.sba.gov/funding-programs/loans/paycheck-protection-programppp, or contact your local banker.