Your Biggest Stimulus Loan Questions, Answers

The Coronavirus Aid, Relief, and Economic Security Act (CARES) makes $ 350 billion in paycheck protection loans available to small businesses, with individual businesses eligible for up to $ 10 million in forgivable loans .

Naturally, small business owners have questions. Here are some of the most common questions Inc. readers submitted regarding the Paycheck Protection Program (PPP). Much of the information comes from a recent webinar with Ami Kassar, an expert in small business loans and founder of loan consultancy MultiFunding.

1. What are the key elements that we need to be aware of to ensure that we are legitimately eligible for PPP loans?

In general, you are eligible for PPP loans if your business has less than 500 employees and was in business on February 15, 2020. Unlike traditional loans from the US Small Business Administration, nonprofits, sole proprietorships, workers independent. , and people who earn their income as independent entrepreneurs are eligible. There had been some confusion as to whether having credit available elsewhere made you ineligible, but now we know that you are eligible whether or not you have credit available elsewhere. Some industries, including many agricultural industries, define small business differently. You can view size standards by industry on the ASB website.

2. There is an exclusion for employees earning over $ 100,000. Does that mean their salary is totally excluded, or just capped at $ 100,000?

This means that for the purposes of calculating your loan, their salary is capped at $ 100,000. if you have an employee who earns a salary of $ 150,000, for example, your maximum loan amount will be calculated using a salary of $ 100,000 for that employee.

3. What is the difference between a loan and a grant?

A grant is a loan that is canceled, which means it does not have to be repaid. Your PPP loans will be canceled as long as you do not lay off employees or reduce their pay by more than 25% (for employees earning less than $ 100,000) within eight weeks of receiving the loan. If you lay off employees, you won’t be forgiven for the wages you don’t actually pay, but the wages of your remaining employees will always be. Here’s how to turn a paycheck protection loan into a grant.

4. If we have already had layoffs, could we still be eligible for a loan forgiveness if we reinstate our employees?

If you rehire an employee, you will be able to count their salary for the period they are on your payroll.

5. Which banks will participate in the payroll protection program?

Various financial institutions will participate, although many of these details have not yet been made public. Kassar says everyone will likely have their own criteria for the size of the loans they offer. For example, some institutions might only accept loan applications of up to $ 350,000, while others might only offer loans of $ 1 million to $ 5 million. Banks may prioritize working with their existing customers first, so you should ask the bank you are working with if they participate in the program and under what criteria. If you don’t meet their criteria, check with another bank.

6. As a business owner, is my W2 salary from my own business also covered by the PPP?

Kassar believes that W2 paychecks from business owners are included, up to a maximum of $ 100,000.

7. When will the loans be available?

This is one of the biggest points of uncertainty. “It’s really hard to predict,” Kassar says. “People say, ‘Oh great, I’ll get these PPP loans in a week or two. You can’t count on it. “While the government has said it hopes they could be available by the end of next week, Kassar thinks it will likely take three to four weeks. If you can get a bridging loan from your bank In the meantime, he says, you may be able to refinance it later as a PPP loan, although that depends on your relationship with your bank.

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