by Barron Guss, CEO and President
Over the past few days, I have been asked this question numerous times by business owners. When I began to reflect on what prompted these types of questions, it occurred to me that there was a deep misunderstanding about the genesis of the PPP loans and their purpose. With the preceding in mind, I’ve decided to offer a little guidance on “now what?”
The PPP loan is first and foremost an SBA loan to your business. It’s unique in that there are no personal guarantees or financial statements involved. The term is for 24 months at an interest rate of 1%. The only restrictions are that the proceeds must be used to cover payroll costs such as wages, health benefits, etc., and you may also use a portion of the proceeds to pay rent, utilities, loan interest and mortgage interest.
Based on the preceding, this should be relatively simple, but start contemplating the thought of forgiveness and the wheels start falling off the bus.
eBook Download: I’ve Got My PPP Loan, Now What?
To get Payroll Protection Program loan guidance and actionable tips to do right away if you’ve received emergency loan approval for your business, download the eBook, below.
New 5/6/20: Looking for a deeper dive? Download the eBook supplement, Loan Reduction Computations.
About the Loan Reduction Computations Supplement
This new guide will give you further insight into:
- Typical forgiven and unforgiven loans
- Recalculation of rent, utilities and interest caps
- Loan forgiveness recalculation for reduction in headcount
- Reduction in loan forgiveness by salary reduction
- FTE and equivalent calculations
Although we have done our best to interpret the current laws and apply best practices, the SBA and the U.S. Dept of Treasury have not issued its final guidance on any of the subject matter, so please consult with your business advisor or tax professional before taking any final action.
This article is for informational purposes only and does not constitute legal advice. Readers should first consult their attorney, accountant or adviser before acting upon any information in this article.