The Paycheck Protection Program (PPP) is a measure by the Small Business Administration (SBA) and the Treasury Department to help small business owners impacted by the coronavirus pandemic.
The loan program has raised some questions that have resulted in substantial revisions. However, it remains an interesting alternative for small business owners, sole proprietors, independent contractors, and self-employed individuals.
The deadline to apply for a PPP Loan is June 30, and $100 billion remain available. If you applied, or are planning to apply, keep the following PPP Loan tips in mind.
Get Current Information
The regulations for PPP Loans are not static. In fact, they have evolved a couple of times over the last several weeks. That’s why getting current information is the first among our PPP Loan tips.
The most recent changes to the rules governing PPP Loans were made at the beginning of this month, when the Paycheck Protection Program Flexibility Act (PPPFA) was signed into law. Click on this link to check the post we published back then. For example, some of most relevant changes include:
- The amount of the PPP Loan you must spend on payroll is 60% (previously it was 75%).
- Borrowers now have 24 weeks to use their PPP Loans (originally, they had eight weeks)
- The deadline to rehire workers in now December 31, 2020 (the previous deadline was June 30, 2020)
- New forgiveness exemptions,
- Extension of repayment terms from two years to five years.
Keep Accurate Records
Accurate recordkeeping is key to get your PPP Loan forgiven. Remember: your loan can be forgiven as long as you use the money to cover payroll costs, mortgage interests, rent and utility costs. All these expenses are covered if incurred over 24 weeks starting from the day you received the first payment from your lender.
Above all, be meticulous and make sure to keep at least these documents (note that your lender may request additional documentation):
- Payroll reports.
- Payroll tax filings.
- Income, payroll and insurance filings from your state.
- Copy of paperwork submitted to bank.
- All documents related to your eligible interest, rent and utility payments.
- Proof that you were on business on February 15, 2020.
Put Your PPP Loan Into a Separate Bank Account
These are peculiar times for everyone, and you want to simplify things as much as possible. If you apply for a PPP Loan, one of the best ways to keep things simple is putting the proceeds from your loan into a separate bank account. This way it will be much easier to track transactions and expenses when you apply for forgiveness. In addition, loan forgiveness is not taxable, so it’s advisable to keep your business revenue separated from the loan proceeds.
Are you looking for options to keep your business moving forward? At Uniko Biz Solutions we are ready to help you find the financing alternative that best suits your needs.