The Paycheck Protection Program (PPP) is a Small Business Administration (SBA) loan created to help businesses continue to employ their workforce amidst the COVID-19 pandemic.
Basic information
The Paycheck Protection Program is a loan designed to incentivize a continued employed workforce and will forgive loans if all employees remain on the payroll for eight weeks. The money must be used for payroll, rent, mortgage interest and utilities.
Small businesses 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 once they are approved and enrolled in the program.
Loan applications can be processed as soon as April 3, 2020, and the program will be available through June 30, 2020.
Who can apply?
The following businesses affected by COVID-19 may be eligible:
- Any small business concern that meets SBA’s size standards (either the industry-based sized standard or the alternative size standard)
- Any business, 501(c)(3) non-profit organization, 501(c)(19) veterans organization or Tribal business concern (sec. 31(b)(2)(C) of the Small Business Act) with the greater of:
- 500 employees, or
- That meets the SBA industry size standard if more than 500
- Any business with a NAICS Code that begins with 72 (Accommodations and Food Services) that has more than one physical location and employs less than 500 per location
- Sole proprietors, independent contractors and self-employed persons
Loan forgiveness
As stated earlier, the loan will be fully forgiven if it was used for payroll costs, interest on mortgages, rent and utilities. The employer must maintain or quickly rehire employees as well as maintain salary levels. Forgiveness will be reduced if the number of full-time employees decreases, or if salaries and wages are cut.
Loan payments will be deferred for six months, and neither the government not lenders will charge small businesses any fees. The loan has a maturity of two years with an interest rate of 1%.
The U.S. Department of the Treasury provides ample application information on this loan, including:
- Overview of the program
- Lender information
- Borrower information
- Borrower application form
- Lender application form
- Frequently asked questions
- Find an eligible lender
About National Association of Tax ProfessionalsThe National Association of Tax Professionals (NATP) is the largest association dedicated to equipping tax professionals with the resources, connections and education they need to provide the highest level of service to their clients. NATP is comprised of over 23,000 leading tax professionals who believe in a superior standard of ethics and exemplify professional excellence. Members rely on NATP to deliver professional connections, content expertise and advocacy that provides them with the support they need to best serve their clients. The organization welcomes all tax professionals in their quest to continually meet the needs of the public, no matter where they are in their careers.
The NATP headquarters is located in Appleton, WI. To learn more, visit www.natptax.com.
Information included in this article is accurate as of the publish date. This post is not reflective of tax law changes or IRS guidance that may have occurred after the date of publishing. All taxpayer circumstances are different, and NATP recommends contacting research services if you have specific questions about your clients’ tax situations.