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CARES Act Interim Final Rule for Paycheck Protection Program (PPP)
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Hope you had a great weekend and are still faring well while staying at home.
During the past week, several of our business owner clients have requested we provide updated details about the PPP.
On April 2, 2020, the Small Business Administration (SBA) issued an interim final rule (Docket No. SBA-2020-0015, the "Rules") for the administration of the Paycheck Protection Program (PPP) created under Section 1102 of the CARES Act.
We have received notice that as of April 16 there was a lapse in appropriations, so the SBA is currently unable to accept new applications for the PPP based on available appropriations funding. If you have already applied, there is a possibility the application could still be approved, but SBA and banks are no longer eligible to accept new applications. Congress is considering another $250B in funding, and we will provide further updates if additional appropriations are approved.
PPP Key Points:
- Small businesses and sole proprietorships were eligible to apply on April 3, 2020
- Independent contractors receiving 1099-MISC forms and self-employed individuals were eligible to apply on April 10, 2020
- If additional funding is approved by Congress, the program was designed to accept new applications through June 30, 2020.
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The program provides cash flow assistance through 100 percent federally guaranteed loans to employers who maintain their payroll during this
emergency. The purpose of loans is for employers to maintain their payroll, which would help workers remain employed.
If you run a small business with more than two employees, you are eligible for:
- Forgiveness of up to 8 weeks of 2.5 times average monthly payroll based on employee retention and salary levels, no SBA fees, and at least six months of deferral of payments
- Employee Payroll Costs include: Salary, wages, commissions, tips (capped at $100K per employee); Benefits including vacation, parental, family medical or sick leave; State and local taxes assessed on compensation
- This program would be retroactive to February 15, 2020, in order to help bring workers who may have already been laid off back onto payrolls
If you are an independent contractor or self-employed, you are eligible for:
- The maximum loan size is up to 2.5 times your average monthly 1099-MISC or net self-employment income for the past 12 months
- All amounts spent on the following list of items during the first eight weeks of the loan term are 100% forgivable: (a) to replace your 1099-MISC income or your net self-employment income, (b) interest on mortgages, (c) business rent, and (d) business utilities. Note that if more than 25% of this amount is used for interest on mortgages, business rent, and business utilities, not all of the amount spent may be forgivable.
- Loan payments will also be deferred for six months
- No collateral or personal guarantees are required
- Neither the government nor lenders will charge small businesses any fees for the loans
If you run a business and are considered self-employed, you are eligible for:
- The maximum loan size is up to 2.5 times your average monthly Self-Employment Income on Form 1040, Schedule C
If you are part of a partnership, you should submit under the business and not as a separate PPP loan application for yourself as a self-employed individual. Instead, the self-employment income of general active partners may be reported as a payroll cost, up to $100,000 annualized, on a PPP loan application filed by or on behalf of the partnership.
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Overview of how PPP Loan Forgiveness works:
- All or part of the loan you receive under PPP could be forgiven if you keep all employees on payroll-or rehire them by June 30, 2020
- Payroll costs must be 75% or more of your approved loan amount. Only 25% of the amount forgiven can be used on non-payroll expenses.
- The forgiveness won't happen until the end of the eight-week period of employment following receipt of your loan
There are some important distinctions between CARES Act and Interim Final Rule issued by Small Business Administration on April 2.
- PPP loans will have a two year, not a 10 year maturity
- Loans will be at a 1% interest rate, not a 4% interest rate
- Applications will be processed on first-come, first served basis
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We hope to bring you the good news of more funding in the next update, so please stay tuned to our communications.
If you would like to discuss this update, or even if you need advice if you didn't get funding, please do not hesitate to contact us at
304-626-3900
.
Take care and w
arm regards,
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Not everyone takes their job as seriously as you.
Check out the PLUMBER OF THE YEAR Award Finalists below.
Be sure to download the pictures :-)
FINALISTS:
&%$@#---- very good reason for not putting the toilet paper on the roll.
Hmmmmm...
Should have measured twice!
Apparently, you don't want anyone seeing your face, but everything else is okay?
The oak seat is a nice touch, though.
And the purpose for the door is?
This stall is for people that have arms like an Orangutan.
This would be the "half bath" noted in the real estate listing?
Very Classy! And, only three steps to the throne when you're in a hurry!
How does this even get past the planning phase? I guess you have to pee in your buddy's back pocket if you are not first.
And now drum roll please...
AND THE PLUMBER OF THE YEAR AWARD GOES TO:
Absolutely brilliant...
FYI ... ALL OF THESE PLUMBERS ARE THANKFULLY NO LONGER IN THE BUSINESS.
THEY HAVE BEEN ELECTED TO PUBLIC OFFICE AND NOW SERVE IN VARIOUS POSITIONS IN THE GOVERNMENT.
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We specialize in working with a select group of Entrepreneurs, Professional Practitioners, and Individuals in the Retirement Red Zone.
We developed and refined a consistent process that helps our clients in four primary ways:
- Maintain a Successful and Sustainable Lifestyle in Retirement
- Tax Mitigation Planning
- Family Protection against Unplanned Catastrophic Losses
- Transfer Family Wealth and Legacy in the Most Efficient and Tax Advantageous Manner
If you would like help in accomplishing these things,
request a listening session today.
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In Case You Missed It
We've been sending out quite a few communications lately to keep you informed and at ease during this unprecedented time. In case you've missed any of our communications, here are some other helpful links:
4/17/20: Coronavirus Care Package: Things That Make You Go Hmmm...
4/15/20: COVID-19: CARES Act Allows $100,000 Tax-Free IRA Grab and Repay
4/14/20: COVID 19: Important Tax Breaks from the CARES Act
4/13/20: 6 Ways the CARES Act Means Easier Distributions and Loans From Retirement Accounts
4/10/20: 2020 Tax Reference Guide
4/9/20: 7 Estate Planning Must-Do's in the Time of COVID-19
4/8/20: Coronavirus Care Package #1
4/6/20: What is The Worst Virus Outbreak Ever?
4/4/20: Do the C.R.E.F.I Calculation Now
4/3/20: How the Coronavirus Paid Leave Rules Apply to You
4/2/20: 3 CARES Act Actions for Small Businesses
4/1/20: 4 Significant Ways the CARES Act Can Provide Financial Relief
3/30/20: Top 8 Changes to the SECURE Act You Need to Know
3/28/20: Managing Anxiety Through Charitable Giving:
3/25/20: Checking In and Helpful Resource Links:
3/24/20: This is What You Pay Us to Do:
3/23/20: 90 Day Tax Deadline Delay:
3/20/20: Coronavirus and the State of the Markets:
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Beacon Wealth Management
607 East Pike Street,
Clarksburg, WV 26301
304.626.3900
Securities offered through Cambridge Investment Research, Inc., a broker-dealer, member
FINRA
/
SIPC
. Advisory services offered through Cambridge Investment Research, Inc., a Registered Investment Advisor. Beacon Wealth operates independent of Cambridge.
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