As part of the recently passed $2.3 trillion economic lifeline package, the Paycheck Protection Program will provide forgivable loans to small businesses due to the unprecedented economic disruption caused COVID-19. CPA Accounting & Tax Services has outlined important items you need to know about the Paycheck Protection Program.
What is The Paycheck Protection Program? The Paycheck Protection Program is part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. This program is intended to provide American small businesses with eight weeks of cash-flow assistance to cover payroll and other costs through forgivable, federally guaranteed loans.
When Can I Apply?
Small businesses and sole proprietorships can apply for the loans starting on April 3, 2020 from SBA-approved lenders. Independent contractors and self-employed individuals can apply starting April 10. Applicants are encouraged to apply early as there is a funding cap for this program. You have until June 30 to submit an application.
What are the Details Of The Program?
• All small businesses are eligible (less than 500 employees).
• The loan has a maturity rate of 2 years and an interest rate of 1%
• There is no need to make loan payments for the first six months
• No collateral or personal guarantees required. No fees.
• The loan covers expenses dating back to February 15
• The loan can be forgiven and essentially turn into a non-taxable grant
Small businesses, sole proprietorships, independent contractors and self-employed individuals can all qualify.
What can I use the funds for?
The funds are intended for and must be used to keep employees on payroll, make mortgage payments or lease payments, group health care benefits/insurance premiums, utility payments and interest on other debt obligations that were incurred before the covered period. If you use funds for other purposes, they will not be eligible for forgiveness.
What documentation will I need?
• Sole proprietorships: Must submit schedules from their tax return filed (or to be filed) showing income and expenses from the sole proprietorship. Self-employed individuals: Must submit payroll tax filings reported to the Internal Revenue Service.
• Independent contractors: Must submit Form 1099-MISC.
How do I apply?
You can apply for the Paycheck Protection Program through any SBA-approved lender (banks or credit unions). Click Here to find a lender using the SBA’s Lender Match tool.
Navigating through the Payment Protection Program can be difficult. Contact the professionals at CPA Accounting & Tax Services to help guide you through tax season and beyond. We specialize in Business Accounting Services, Individual Tax Services, International Tax Services and Tax Resolution Services. We have offices in Orlando, Florida and service clients worldwide. Find out how we can serve all of your accounting needs by contacting us today