April 2, 2020
I realize that you have received a lot of information on federal and state programs to help you get through this difficult time. Even so, it is important to emphasize that time is of the essence when it comes to applying for assistance. Here is information on how and when you should apply for the Payroll Protection Program and New Jersey’s Small Business Emergency Assistance Grant Program.
Federal Paycheck Protection Program
PPP is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities.
Paycheck protection loans will be granted through banks. You can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. You should consult with your local lender as to whether it is participating in the program. Lenders may begin processing loan applications on April 3, 2020.
This program is for any small business with less than 500 employees (including sole proprietorships, independent contractors, and self-employed persons), private non-profit organization, or 501(c)(19) veterans organizations affected by coronavirus/COVID-19. Businesses in certain industries may have more than 500 employees if they meet the SBA’s size standards for those industries.
Small businesses, sole proprietorships, nonprofits and veterans organizations can begin applying for PPP loans beginning April 3. Independent contractors and the self-employed can start applying April 10. PPP loans will be available through June 30, 2020.
Small businesses in the hospitality and food industry with more than one location could also be eligible at the store and location level if the store employs less than 500 workers. This means each store location could be eligible.
Businesses will be required to begin repaying the loan in six months unless part or all of it is forgiven. Up to the full amount of the loan can be forgiven if you can document that the money was used to maintain your employment at 2019 levels and you did not significantly reduce employees’ pay.
The SBA is anticipating that no more than 25% of the forgiven amount may be for non-payroll costs, and that the payroll portion of forgiveness could be reduced if you decrease your full-time employee headcount and/or decrease salaries and wages by more than 25% for any employee who made less than $100,000 annualized in 2019.
If you have already let people go, you have until June 30 to restore your full-time employment and salary levels for any changes made between February 15 and April 26, 2020, to qualify for loan forgiveness.
New Jersey’s Small Business Emergency Assistance Grant Program
We are less than 24 hours away from the start of the application process for New Jersey’s
Small Business Emergency Assistance Grant Program
from the
New Jersey Economic Development Authority
(NJEDA). Starting at 9:00 AM tomorrow morning, you can
go here
to complete the NJEDA application.
The application will not be available until tomorrow morning.
NJEA has allotted $5 million for Small Business Emergency Assistance Grant Program. Many small to medium-sized enterprise (SME) businesses will be applying for assistance. You only have until April 10 at 9:00 AM to submit your application. So take the time today to prepare. You can find a wealth of information on this program from the
New Jersey Business and Industry Association (NJBIA)
. Scroll down to see screen shots of the application. The required information includes:
- A contact who is authorized to speak on behalf of the company.
- Basic information about the company
- Registered legal name and “Doing Business As” name
- Federal Employer Identification Number (EIN)
- Year your company was established
- Full-time employees as of December 31, 2019, and Part-Time Employees as of December 31, 2019.
- Industry as defined by your NAICS code
- Answers to the State’s basic debarment questions
- Certification that the business
- Is not a home-based business
- Is not a prohibited business
- Has been impacted by the COVID-19 outbreak
- Has a material financial need that cannot be overcome without the grant funds
- Will make a best effort not to lay off any additional employees and re-hire any whom have already been laid off
- The NJEDA may check your entries against other State sources of data
Under the Small Business Emergency Assistance Grant Program, funding may be used for unrestricted payroll and working capital support; however, funding cannot be used for capital expenses, including construction.
Eligible businesses may receive $1,000 per full time employee (FTE), with the calculation based on the WR-30 filing from the most recent payroll period from date of application. The minimum grant amount (per application) is $1,000; and maximum grant amount (per application) is $5,000.
We will share more details as they become available. Please visit our
COVID-19 Resource Page
for more updates.
Feel free to contact any member of our team at (610) 828-1900 (PA) or (732) 341-3893 (NJ) with questions. Rich Higgins, CPA, managing principal – New Jersey office can be contacted at
[email protected]
. I can be reached at
[email protected].
As always, we are happy to help.
Stay safe,
Marty McCarthy, CPA, CCIFP
Managing Partner
McCarthy & Company
Sources: Small Business Administration (SBA), New Jersey Economic Development Authority (NJEDA), and New Jersey Business and Industry Association (NJBIA).
Disclaimer: This alert is for informational purposes only and does not constitute professional advice. Information contained in this communication is not intended or written to be used as tax advice, and cannot be used by the recipient to avoid penalties that may be imposed under the Internal Revenue Code. We strongly advise you to seek professional assistance with respect to your specific issue(s).
