An Update on the Payroll Protection Program PPP

can you hire new employees with ppp

With most businesses unable to earn income during mandated closures, the PPP was designed to help businesses continue to pay their employees. The goal was to keep employees earning at least 75% of their normal weekly pay. Q) Prior (week of 3/9/20) to the covid-19 situation I had to let my Operations Manager go with cause.

can you hire new employees with ppp

In addition to following all COVID-19-related CDC guidelines relevant to your industry, you can do your best to address specific employee concerns to make your workplace safer and increase social distancing. Overall, most employees are probably somewhere in the middle—concerned about their health on the job, but likely taking monetary considerations into account as well. Still other workers may be solely motivated by health considerations, and unwilling to come back to your workplace at any price.

Eligibility Costs

However, all PPP loans above $2 million will automatically be audited. If you are concerned about this, talk it over with your lender before accepting a PPP loan. When PPP was originally announced, businesses had to choose whether to take advantage of the Employee Retention Tax Credit or take out a PPP loan.

can you hire new employees with ppp

Additionally, companies that meet the SBA’s “alternative size standard” based on their tangible net worth (not more than $15,000,000) and net income (not more than $5,000,000), qualify as small businesses and therefore are eligible for PPP loans. For owner-employees, self-employed individuals, and general partners 24-week compensation is capped at the lower of $20,833 or the 2.5-month equivalent of their applicable compensation in 2019 for the 24-week period.

Frequently Asked Questions About Unemployment Benefits for the Self Employed

This is welcome news as there was no policy reason partnerships should be treated differently than other businesses. We anticipate all borrowers of $2 million or more will receive the questionnaire from their lender upon submitting their PPP forgiveness application. We recommend these borrowers review the questionnaire before your PPP loan forgiveness application submission as the ten business day turnaround time is short given the length of the questionnaire and the anticipated time required to assemble the supporting documentation. We also recommend you consider how the catchall question at the end of each section can frame the case for your loan necessity in the most favorable light. While loan forgiveness is not limited to payroll expenditure, payroll costs must be 60% or more of any forgiven amount.

  • PPP may be used to pay yourself but you cannot apply based on 1099 contractors.
  • Such costs can include establishment of a drive-through window facility, new ventilation or filtration systems, physical barriers, expanded space or other assets relating to compliance with government requirements.
  • Her shopping and retail expertise has been cited in numerous publications, including Reader’s Digest, MSN, Yahoo Finance, and GOBankingRates .
  • For owner-employees or self-employed individuals/general partners, the amount is capped at $15,385 per individual.
  • If you have any questions about how your employment has been affected by the coronavirus pandemic, please don’t hesitate to contact our office.

Funds from a PPP loan must be spent within the Covered Period.As we mentioned, all borrowers now have the option to use a 24-week Covered Period. If you already know the basics, here’severything you need to apply for forgiveness.

Questionnaires for Loans Greater Than $2 Million

Businesses are encouraged to also look at state and local resources and to talk with local banks about additional short-term loan options. Businesses can also apply for EIDL grants to help cover costs. PPP loans that were issued before June 5, 2020, mature in two years. Loans issued after June 5, 2020, have a maturity of five years. The maximum loan size for a first-time PPP loan is $10 million, and the maximum loan size for a second-draw loan is $2 million. Also, both the government and lenders involved with PPP are not allowed to charge small businesses any fees for processing these loans. One of the most extensive parts of the U.S. government’s response to COVID-19 disruptions for businesses was the creation of the Paycheck Protection Program .

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If the borrower submitted a loan forgiveness application to its PPP lender before December 27, 2020, then the form must be completed and submitted to the PPP lender not later than January 26, 2021. If the PPP lender has already submitted a forgiveness decision to the SBA, the PPP lender must promptly transmit the completed Form to the SBA. Otherwise, PPP lenders must transmit the completed Form 3508D to the SBA when the PPP lenders issues its forgiveness decisions to the SBA.

Last year my average pay I was receiving 53.4 hours of pay through the ppp loan. By working on repairing cars if I turned 44 hours commissions he would keep all that pay for himself and used the ppp loan to pay me my weekly average. Should he have only use the ppp loan to make me whole? If I turned 44 hrs and then only use another 9.4 hrs from the ppp loan? That way he could be able to use in up between the 8 – 24 weeks what would care my weekly average longer? Otherwise he pockets 100% every penny collected from customers or insurance company’s and only used the ppp loan to pay us. In other words, your loan forgiveness will be reduced if you decrease your full-time employee headcount; and, it will be reduced if you decrease salaries and wages by more than 25% for any employees who made less than $100,000 in 2019.

While some businesses are legally allowed to reopen, actually doing so presents a challenge for myriad reasons. Not only is customer behavior uncertain right now, as COVID-19 remains an ongoing threat to communities’ health and safety, but employees are also feeling uncertain about returning to work. Complicating the situation even further, businesses who recently received a Paycheck Protection Program loan are now calling workers back. These businesses are required to spend the federal loan proceeds on can you hire new employees with ppp payroll in order for the loan to be forgiven—but in some cases, the workers do not want to return, often because they are making more money on unemployment benefits. This documentation must include copies of applicable COVID Requirements or Guidance for each business location and relevant borrower financial records. On March 3, 2021, the IRS issued an interim final rule allowing an IRS Form 1040, Schedule C filer to elect to calculate the owner compensation share of payroll costs based on gross income.

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