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Using the Paycheck Protection Program

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    Congress allocated $349 billion for small business relief as part of the CARES Act. The Paycheck Protection Program (PPP) helps small businesses maintain their payroll costs, keep their employees, and rehire those who were laid off. Here's a breakdown for small business owners, self employed workers, and independent contractors interested in the program. Let's dive in.

    What is it exactly?

    The PPP consists of low interest loans (up to $10 million) and payments for businesses that are struggling to keep their employees on payroll, as well as rehiring those they had let go. The SBA will forgive the loans as they are used for payroll, rent, mortgage, or utilities, and all employees are kept on payroll for eight weeks.

    How loan forgiveness works.

    It's basically taking a loan and turning it into a grant. To qualify for loan forgiveness, businesses must maintain what is considered their full time head count, as well as wages for their employees for eight weeks after the loan is dispersed. No more than 25% of the loan can be used for nonpayroll costs such as rent. If a business' head count/wages go down by more than 25%, full forgiveness of their loan isn't given. If their workers have already been laid off, a business can still have their loan forgiven as long as they rehire their workers before the loan is dispersed. Also, they can choose a date between now and June 30, 2020 for their loan to be dispersed if they need more time to rehire their workers.

    For the self employed

    Self employed workers can claim up to $100,000 a year. This includes wage, income, commission or net earnings. This is according to the CARES Act.

    Part-time workers and independent contractors.

    Businesses can use the PPP loan to cover their part-time employees which is based on the employee's average hours and earnings before all of this.

    Independent contractors and gig workers aren't covered, but they can apply for their own PPP loan.

    Application Deadline

    You must apply through a bank or other lender by June 30, 2020.

    If you're a small business owner and wish to apply for this loan, do it as soon as possible. Loans are being distributed by banks and lenders on a first come first serve basis and many banks are choosing only to work with their existing business customers.

    I think this is a great step to ease economic hardship for sure, especially if they approve of a budget increase, which they might. Are there any other provisions they should have added to this program? Also, was it wise for congress to let banks and other lenders divvy out the loans? The SBA would be even more bogged down than they already are if not, in my opinion.

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    For small business owners, what are your thoughts on the EIDL loan? Its the disaster relief loan that everyone seemed to be excited about at first, because you could get $10k as a loan you don't have to pay back at all. And all you had to do was have a business of any kind open before the date of January 31st, 202o to apply and seemingly get approved for.

    The more I look into it though, the more it seems like it wouldn't be 10k for most people, and it might be very hard to qualify for, and it might take a long time to actually get.

    Economic Injury Disaster Loan Emergency Advance

    Here's a video I watched that made me think its not what people thought it was at first blush:

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    The Senate is fighting right now on the best way to extend this program, by trying to add $250B more. But of course, neither side of the aisle can agree how to divvy up the funds. Either way its clear this program is underfunded and the money will dry up sooner than it should.

    I think small businesses are being the most ignored by stimulus efforts right now. This program still makes it really hard for true small businesses to get funds they need to survive right now. Still seems to largely favor the largest of the small businesses.

    We are on the brink of waking up in a few months or a year from now once everything is under control, to find our nation's business landscape unrecognizable. I fear only the largest companies with the deepest pockets can withstand this shutdown. Congress needs to prioritize paycheck protection programs for businesses large AND small, I would say at least equal to how much they are doing for unemployment. If you can allow businesses to stay afloat and not have to fire their employees in the first place, that is the best option.

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    Senate strikes deal on $484 billion relief package for small business, hospitals, testing

    Good news. The deal is expected to pass into law today or at least this week. It includes $320 billion more for Paycheck Protection Program. $60 billion more for small lenders. And then $75 billion for hospitals and $25 billion for testing.