Recently, as a provision of the CARES Act, the government has instated The Paycheck Protection Program (PPP). It is a new loan program for small businesses and was enacted by the Small Business Administration (SBA). Essentially, the program is designed to guarantee loans from approved lenders to eligible small businesses, and fortunately, the forgiveness of these loans is available in many situations. Please continue reading and speak with our knowledgeable New Jersey business law attorney to learn more about the PPP.
What businesses are eligible for PPP?
The new provision states that businesses and nonprofit organizations that have no more than 500 employees may receive the PPP through June 30, 2020. As long as the business was operating with employees on February 15, 2020, it should qualify. There are certain exceptions to the 500-employee rule, of which our knowledgeable business law attorney would be happy to speak with you about.
You should note, however, that the PPP does have a maximum loan amount, of which the guidelines say will be equivalent to about 10 weeks of payroll costs, capping off at $10 million per business. That being said, these loans will also calculate employer healthcare costs, state and local taxes, and more.
On top of commissions, wages, and more, payroll costs also include employer healthcare costs, like insurance premiums, employer state and local taxes paid on employee gross pay, and other specified costs. However, as provided by the CARES Act, this calculation does not include employee annual salary of over $100,000 per employee.
Are PPP loans forgivable?
Many small business owners will be relieved to learn that up to 100 percent of the PPP loan is forgivable, as long as the funds are used for payroll costs and other certain loan uses. That being said, under most circumstances, at least 75% of the forgiven loan amount must be used for payroll costs.
If you have any additional concerns regarding the PPP provision, please reach out to our experienced New Jersey business law attorney today. We are here to help you protect your small business through these turbulent times.
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Our firm proudly represents clients in New Jersey who are faced with matters of family law, criminal defense, business law, real estate law, or estate planning. If you require strong and dedicated representation for any of your legal matters, please do not hesitate to contact The Law Offices of George J. Mardinly to schedule a consultation.