Paycheck Protection Program — Should You Apply?

April 1, 2020 at 1:55 pm |

To Our Simon Lever Clients and Friends:

The SBA Paycheck Protection Program (PPP or PPL) applications are now available. Click here for a sample copy of the application. We urge you to contact your banker ASAP if you intend to apply. Applications will be able to be submitted through banks to the SBA starting April 3rd. For self-employed or independent contractors, the submission date is April 10th. For a summary of the Paycheck Protection Program, click here.

• Businesses who have largely kept their workforce in place should apply for this SBA Paycheck Protection Program through your bank. The Paycheck Protection Loan will be based on 2.5x monthly payroll costs. Explanations about loan forgiveness are included in the attached document. The loan forgiveness will not trigger taxable income. These dollars will be allocated very quickly, so act now if you fit this scenario!
• If you have suffered a more significant closure and have been forced to lay off your employees, then an immediate PPP application may not be your best option. There are other options we should discuss with you.
• If employees have been furloughed and are collecting unemployment, for now we suggest having them continue collecting unemployment, and then if and when a PPL is received, planning can be done to maximize the loan forgiveness amount by rehiring employees. At this point we recommend this approach as opposed to rehiring now and starting to pay employees for not working and then also eliminating eligibility for unemployment.
• Regardless of the above, we are recommending that employers take advantage of the employee retention tax credit (ERTC), and while a taxpayer cannot receive the benefit of a PPL and the ERTC, the ERTC can be paid back at a later date if a PPL was received without any penalties and will immediately assist with cash flow. To qualify, there has to be some instance of a shutdown that has impacted your business.

We will continue to be on the lookout for more clarifications and guidance in the coming days. Please note we must caveat the above as there is a large volume of information, and new directions, clarifications, and regulations are literally coming out hourly.

Please contact your Simon Lever representative for assistance making the best decision for your business. This is our priority right now as tax filings have been extended! We’re here to help you!