Coronavirus Aid, Relief, and Economic Security Act CARES Act – Paycheck Protection Program (PPP)

Paycheck Protection Program (PPP) Guidance

The Paycheck Protection Program, part of the new CARES stimulus package, is a federal loan program aimed at helping small businesses who have been severely impacted by COVID-19. The intent of the Paycheck Protection Program is to accomplish two primary goals:

1. Assist businesses in meeting their near-term operating expenses, and
2. Provide relief such that the business may maintain its employee base. 

The exciting news is that lenders may begin processing loan applications as soon as April 3, 2020!

Important: The guidelines of the PPP program are very fluid and have seen changes.  The information contained herein is to the best of our knowledge at this time.  As IRx receives any important updates we will communicate those to you.

As a reminder, the main highlights of this loan are:

• Loans can be up to 2.5 x the borrower’s eligible average monthly payroll costs, not to exceed $10 million
• Up to 8 weeks of approved expenses may qualify for forgiveness with any remaining balance financed.  The loans will have a maturity of 2 years and an interest rate of .5%
• Initial loan payment will be deferred 6 months
• The loan may be used for approved expenses including payroll, rent, mortgage interest, and utilities
  • Note: Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs

What should you do now?

At this time we recommend you begin to collect the information outlined below and contact your current SBA lender.  If you do not have an SBA lender we recommend you contact Live Oak Bank or First Financial Bank.

SBA website Paycheck Protection Program information and Application Form

View a short 1:00 video below with IRx Partner Owen BonDurant and his observations and advice at this time.

Information To Collect

Note: The actual initial PPP Application simply requests your Average Monthly Payroll and Number of Jobs along with a list of greater than 20% owners.  The Payroll Information section below provides the detailed information necessary to properly calculate the qualifying Average Monthly Payroll.  The Other Helpful Information section provides a list of items that will be helpful to collect in advance in anticipation of their need as supporting documentation during the course of the loan.

Payroll Information

Payroll reports for calendar year 2019, which will show the following information:

Note: The Included Payroll Costs less the Excluded Payroll Costs will be used to determine the Average Monthly Eligible Payroll Costs x 2.5 = Loan Amount (not to exceed $10 million)

• Included Payroll Costs:
  • Salary, wage, commission, or similar compensation
  • Payment of cash tip or equivalent
  • Payment for vacation, parental, family, medical, or sick leave
  • Allowance for dismissal or separation
  • Payment required for the provisions of group health care benefits, including insurance premiums
  • Payment of any retirement benefit (401K plans, Simple IRA, SEP IRA’s)
  • Payment of state or local tax assessed on the compensation of the employee
  • 1099s for independent contractors for 2019

• Excluded Payroll Costs
  • Compensation of an individual employee in excess of an annual salary of $100,000
  • Payroll taxes and income taxes
  • Any compensation of an employee whose principal place of residence is outside of the United States
  • Qualified sick leave wages for which a credit is allowed under section 7001 of the Families First Coronavirus Response Act (Public Law 116–5 127); or qualified family leave wages for which a credit is allowed under section 7003 of the Families First Coronavirus Response Act

• List of all owners with greater than 20% ownership

Other Helpful Information

• 2019 IRS Quarterly 940, 941 or 944 payroll tax reports
• 2019 Tax return or a 2019 financial statement