Paycheck Protection Program: Frequently Asked Questions
In the wake of Coronavirus, the American government created a loan program known as the Paycheck Protection Program. They did this in conjunction with the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
The $350-billion project was created to provide small businesses with eight weeks of advance cash-flow assistance via federally-guaranteed loans. In late April, the program expanded with an additional $310 billion in the form of the Paycheck Protection Program and Health Care Enhancement Act. This changed the program in several important ways, allowing businesses more time to use their funds and streamlining loan forgiveness.
Wondering if Paycheck Protection is a good choice for your Orange City business? Not sure you even qualify? Join us, today, as we take a look at some of the most common FAQs we’ve heard regarding paycheck protection, and find the answers you’re looking for.
Can I Only Apply Through One Lender?
Not at all! Businesses applying for PPP can approach as many lenders as they like. The thing to keep in mind is there’s no risk of accidental approval for two loan applications. Lenders processing PPP loans will receive an SBA approval number for any business that qualifies. The SBA only issues one of these numbers (known as PLPs) for each tax identification number, which means two PPP loans can’t actually be approved for one applicant.
What happens to your application with one lender if another lender approves it first? Simple: they will reject any outstanding PPP applications once the PLP number is approved. If you don’t want to be rejected, you’ll want to withdraw your application from these lenders once you’ve confirmed it is approved.
Is This The Same As The SBA Disaster Loan?
The SBA’s Economic Damage Disaster Loan (EIDL) is a separate initiative that shares a lot of DNA with Paycheck Protection but is 100% unique. The SBA’s Disaster Loan (as many people call it) can demand collateral for any loan amount greater than $ 25,000. Paycheck Protection doesn’t require personal or commercial guarantees in order to be approved.
The SBA’s Disaster Loan usually requires that you not have any other lines of credit open anywhere else. Paycheck Protection does not. Paycheck protection loans are also forgivable, provided you followed the terms, whereas disaster loans require a mandatory repayment.
Could I Apply for Both a PPP and an SBA Disaster loan?
Absolutely! But they can’t be for the same purpose.
Does Reducing The Size Of My Workforce Impact My PPP Request?
Only if you have no plans to re-hire any of them or reestablish your standard pay for regular work hours. Prove that you’ve maintained your employee wages and that your pay hasn’t dropped below 25% of your monthly average, by December 31st, and you should have no problems with your application.
Paycheck Protection Program compliance is a central issue in the new payroll regulations currently on their way to American businesses. We’ll be taking a look at some more of these in the coming months, so make sure to check in with us for updates. For payroll and timekeeping services from a professional to help you stay on top of this changing business landscape, get in touch with us, today.
