The PPP (Paycheck Protection Program) comes with the added benefit of loan forgiveness.
The Paycheck Protection Program(PPP) was established by the United States federal government in 2020 in aid for Coronavirus and by the Economic Security Act (CARES Act) with the budget of $953-billion business loans to help the self-employed workers, nonprofit organizations continue paying their workers amid the coronavirus outbreak. The program will end on May 31, 2021, which means businesses still have a few weeks to apply through a private lender. PPP came with the added benefit of loan forgiveness with certain eligibility criterias.
The PPP (Paycheck Protection Program) comes with the added benefit of loan forgiveness for business by just showing the employees and their pay were maintained and that loans were proceeds were used to fund payroll costs and other required expenses. Importantly, 60% of loan proceeds had to be used for payroll expenses.
PPP loans are available to PPP Nonprofits that were in operation on February 15, 2019 and that employ not more than the greater of:
PPP loans are provided to the
- Nonprofits Business
- not more than 500 employees
Loan Terms and Size:
The maximum loan amount is the lesser of:
- $10 million; or
- 2.5 times average monthly payroll costs for employees residing in the United States, plus the amount of any EIDL received between January 31, 2020 and April 3, 2020 that is to be refinanced with PPP proceeds, net of any EIDL advance, if applicable
In addition, borrowers that previously received PPP funds under the Coronavirus Aid, Relief, and Economic Security (CARES) Act but did not acquired loan forgiveness by December 27, 2020, may 1) apply for First Draw PPP Loan under the Economic Aid Act if they previously returned some or all of their borrowed funds of a CARES Act PPP Loan or (2) under limited circumstances, request to modify the amount of their First Draw PPP Loan if they previously chose not to accept the full amount for which they were eligible.
A borrower is qualified for forgiveness on a PPP loan in a sum equivalent to the amount of specific expenses brought about or installments made during a characterized covered period. Preceding the PPP Flexibility Act, the covered period was the eight-week time frame following credit payment. The PPP Flexibility Act protracted the covered period to the period starting on the date of credit dispensing and finishing on the prior of (1) the date that is 24 weeks from there on and (2) December 31, 2020. Borrowers that got a PPP credit preceding the PPP Flexibility Act may choose to hold the eight-week covered period.