Part of the massive CARES stimulus act that Congress passed and President Trump signed last Friday is the $350 billion Paycheck Protection Program ["PPP"]. Simply put, this part of the stimulus is directed to small and medium sized businesses and is meant to provide loans to permit certain businesses [less than 500 employees] to continue to pay payroll [and some other things] that will allow people to stay employed for 8 weeks following the funding of the loan. The big promised benefit is that if you cross your Ts and dot your Is, some or all of the loan will be forgiven. Pending possible forgiveness, no payments are due for 6 months and the loan is paid back over 2 years. Interest is 1%. See our previous blog post as to more details.
In order to have the greatest impact, the Treasury and the Small Business Administration have been rushing to put in place regulations telling potential borrowers and lenders how to make the loans happen. Today, Friday, April 3, was supposed to be the day when the program goes "live," such that applications can be made and approved, and the money disbursed. Needless to say, having only a week to make it happen is not a lot of time to get it done. Moreover, the prospect of potentially "free" money has enticed thousands [maybe hundreds of thousands] of businesses to call their lenders to try to be first in line. Despite the size of the funding, it is expected that there will not be enough money to go around. Anecdotally, I have heard that some smaller banks have gotten funding "approved" in the system today, while others are trying to get their systems up to speed. See this article about some of the challenges that the banks are facing.
For those who are interested, go to the Treasury website to get more info on the program.
Our best advice is to start with your existing banker, as they will already have substantial infomation on your business and thus make getting the application filed easier. The biggest piece of information you will need is payroll information for the calendar year 2019. Discussing that with your accountant and pulling that info together will be the best way to get a headstart.