Paycheck Protection Program
My first analysis of this loan program is that it will be attractive for small business owner clients –Your business and Mine.
As first time applicants we will have to learn fast. We will tell you what we find as we go along. Please let us know any Best Practices that you discover.
Here is a Summary of the Paycheck Protection Program. The business can borrow from the SBA an amount equal to our monthly occupancy costs-rent, utilities, employee salary costs and health insurance. Looks like any employee who earns more than $100,000 is excluded from the calculation.
After the monthly amount is determined then the monthly amount is multiplied by 2.5 to equal the amount of the loan. The loan interest rate is 4% and can have terms of up to ten years.
The program has a powerful incentive since the loan is forgiven as you pay occupancy costs and employee costs. Any of these costs incurred between Feb 15, 2020 and June 30, 2020 will reduce the loan balance. The forgiven loan is not taxable income.
I have introduced myself to the head of SBA lending at Columbia Bank who was with Atlantic Stewardship Bank.
As a Northern NJ Business Owners who has Never Applied for an SBA Loan we intend to learn with you.
CPAs will have to do a lot of work assembling the data to support the application-in the middle of tax season!
The program appears to be so attractive that the banks who are SBA lenders may be overwhelmed by applications-an advantage to those who are organized and can act quickly.
The Best information that I found so far is from Gibson Dunn law firm. https://www.gibsondunn.com/sba-paycheck-protection-loan-program-under-the-cares-act/ and a memo from Senator Marco Rubio’s office.
Please forward this to any of your Small business Owner Friends and Family.