Can the Paycheck Protection Program Help My Florida Business During the COVID-19 Pandemic?

In response to the massive economic shutdown caused by the COVID-19 pandemic, Congress established the Paycheck Protection Program (PPP) to “provide a direct incentive for small businesses to keep their workers on the payroll.” Congress initially appropriated $349 billion to the PPP, which was quickly exhausted. On April 24, the President signed additional legislation authorizing the Small Business Administration to spend an additional $250 billion on PPP loans. Unfortunately, this new funding is expected to “only last four to six days,” according to Forbes.

Forbes noted that about 1.6 million businesses previously received approval for PPP loans “with most still awaiting the funds.” So what will this funding actually do, assuming your business is able to receive any of it? Essentially, a PPP loan allows an eligible business to borrow up to 2.5 times its “average monthly payroll costs,” up to $10 million. For employers, this means the sum of any compensation paid to employees.

There are, of course, some limitations. For instance, you cannot use PPP loans to cover the annual salary for an employee in excess of $100,000, as prorated for the period between February and June of this year. Similarly, if you are a sole proprietor, independent contractor, or self-employed individual, you may only use a PPP loan to cover your own compensation up to $100,000 per year.

What Are the Terms of the PPP Loans?

All PPP loans are offered on the same terms to every qualified borrower. The loan is due within 2 years and carries a fixed interest rate of 1 percent. No payments will be due within the first 6 months. The government also does not require collateral for the loans, and there are no fees or penalties if you decide to repay before the due date. While you do not need to personally guarantee the loan, you may be subject to criminal prosecution if you use PPP loans for any “fraudulent purposes.”

Critically, the government will forgive PPP loans so long as you use the money “to cover payroll costs, and most mortgage interest, rent, and utility costs” in the 8-week period after the loan is made. During this 8-week period, you are expected to maintain your existing employee and compensation levels, subject to the $100,000 limit mentioned above. If you lay off employees or reduce payroll costs, the government may reduce the amount of loan forgiveness. Additionally, the Treasury Department has advised that “not more than 25 percent of the forgiven amount may be for non-payroll costs.”

Is There Still Time for Me to Receive a PPP Loan?

Forbes explained that the “reality is that most American businesses will not receive any of these relief funds.” However, if you previously applied during the first round of funding and received a certification number from the Small Business Administration, then you will receive funding within 10 to 14 working days. If your bank has accepted your application, but you did not receive an SBA number, then Forbes said you will “remain in the queue to receive funds” on a “first-come, first-served basis.”

Speak with a Florida Debt Relief Attorney Today

We know this is a difficult time for most Florida business owners. Even as you may have lost most–or all–of your regular income, you still have mounting bills to deal with. Even if you cannot gain access to PPP loans, there may be other options available. If you need to speak with an experienced Miami debt relief lawyer about those options, contact the Law Office of Julia Kefalinos today. We remain open for consultations during the COVID-19 crisis and can meet with you in-person, or via Skype, FaceTime, WhatsApp and other such video conferencing means while following all safety precautions recommended by the CDC.

Sources:

forbes.com/sites/allbusiness/2020/04/25/paycheck-protection-program-can-your-business-receive-this-money/#65a12d1b2ce2

home.treasury.gov/system/files/136/PPP–Fact-Sheet.pdf