PAYCHECK PROTECTION LOAN INSIGHTS
Be Smart – Be Safe
Anecdotal evidence suggests that upwards of 70% if sign industry shop owners have applied for this program, and while funds have now run out, those who receive their PPP loan in the coming weeks need to be aware of some conditions attached to this money. CSA is sharing this information to help you be smart and stay safe.
Five Things Every Paycheck Protection Program Borrower Should Do After Receiving A Loan
“The Paycheck Protection Program (“PPP”) is the crown jewel of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The CARES Act allocates $349 billion to the PPP loan initiative in an effort to stabilize small businesses during the COVID-19 outbreak and to allow them to retain their workforces while weathering the Coronavirus storm.”
1) Ensure That The PPP Funds Are Used Only For Allowable Uses
The CARES Act requires that a PPP loan recipient certify that the funds will be used for purposes that are authorized under the act. In the rush to claim PPP funds, recipients should not lose sight of the legal restrictions on the use of those funds.
If a PPP loan is used for unauthorized purposes, the loan can be converted into a recourse liability. That is, the SBA may be able to come after the loan recipient or its shareholders, members, or partners for an unpaid loan if they use the PPP funds for unauthorized purposes.
2) Work Closely With Tax Professionals To Maximize The Forgivable Amount
The SBA, in its April 2, 2020 Interim Rule, announced that no more than 25% of the loan forgiveness amount can be attributable to non-payroll costs. While that requirement does not appear on the face of the CARES Act itself, the SBA and Treasury imposed this requirement to align the finite resources available to fund the PPP loan program with the overriding Congressional intent to keep workers paid and employed.
Teresa M. Young has been a consultant to entrepreneurs since 1986, in both retail and B2B sectors. In 1991, she became President of Sign Biz, Inc., a full-service business development company. Young sits on multiple boards, including as Past Chairwoman of both the International Sign Association (ISA) and California Sign Association. She is an accomplished code writer, web developer and contributor to the Git Repository. Young is also an in-demand speaker, engaging business owners with topical and powerful business insights and strategies in support of best business practices and modern marketing strategies under her MintyWorks and Coffee with T brands. 200 click-and-mortar enterprises were established under the Sign Biz business model with more than $19,000,000 worth of SBA-backed funding for these businesses.