The Paycheck Protection Program (PPP) has been infused with additional funding. On April 24, 2020, President Trump signed the Paycheck Protection Program and Health Care Enhancement Act.
This was designed to revive the PPP as well as the Economic Injury Disaster Loan (EIDL) program. In total almost an additional $310 billion will be added to the fund. More funding will also go towards the healthcare industry as well.
So, if your business missed the first round of COVID-19 tax relief and loans, it is not too late. Here is what you need to know to apply for PPP. Let’s break down the application process and beyond.
How Does the Paycheck Protection Program work?
Let’s break it down. This program provides forgivable loans for those who have been economically disadvantaged by the pandemic. These are the requirements for eligibility.
An independent contractor or sole proprietor
You file a W-2 for 500 or employees or less
You don’t have any outstanding debt from government loans that is unaddressed.
How Do I Apply?
To file for these loans, reach out to the bank or lender that you do business with. They may have more or less specific requirements for their application process. You will need at least the following documents and information to apply.
Business Information (EIN, business name, business address, etc.)
Recent Tax Forms
Your 2020 and 2019 Quarterly Form 941
Your 2019 Annual Tax Return, Form 940
Your 2019 W-2s and 1099s. This indicates the wages that you have paid your workers.
How Do I Ensure Forgiveness?
Providing all of the documentation that your lender requires of your business is the first key step in ensuring your forgiveness. You must also pay close attention to how you use this loan money. There are stipulations as to how you can use this money. Keep these rules in mind.
First, you must maintain your payroll, this funding is designed to prevent your business from letting employees go or furloughing them. For forgiveness, you must keep your employees on your payroll, even if they are not receiving their full pay.
You must continue paying your employees at least 75% of their wages. This rule doesn’t apply to employees with salaries of $100,000 or more.
You are allowed to use up to 25% of your funds to pay rent, mortgage, or utilities, as these are necessary to keep your business operational. You must also use this funding within 8 weeks. The other 75% must be used on payroll costs.
There you have it, a quick rundown on the Paycheck Protection Program. Here at ACAwise we are committed to help you keep your business going strong. An important component of this is your ACA reporting. If you have any questions or are seeking a full service solution, please feel free to reach out to us!