Updated: Important Information: Time Sensitive Paycheck Protection Program Loans from Coronavirus Aid, Relief, and Economic Security Act or CARES Act

To our Burkett Family,

As you know and have experienced over the last few weeks our lives and business have changed dramatically. You have probably heard that the federal government passed, and the President signed into law, several bills that are designed to assist small businesses.　 One of these bills is the Coronavirus Aid, Relief, and Economic Security Act or CARES Act. The SBA has also launched the Economic Injury Disaster Loan Assistance (EIDL) program for small business owners. EIDL loans are now available.

These Acts and Programs are designed to assist with funding (cash) for small businesses to allow them to continue to operate and continue to employ their staffs. There are many other parts of the Acts and Programs and will sending you information on those in the near future, but the one we are highlighting today appears to be very time sensitive and should be acted on immediately if you wish to participate.

This is the Paycheck Protection Program (PPP), also known as Payback Protection Loans (PPL) which is part of the CARES Act.

The federal government has allocated $349 billion dollars to make loans to small businesses with less than 500 employees to pay their employees during the COVID-19 crisis. The loan amount is the lesser of $10 million or 2.5 times your “average monthly payroll” for the prior 12 months. Per recent guidelines released by the Treasury, the loan is due in 2 years with a fixed interest rate of 1.00% and all payments are deferred for 6 months. Further, the loan may be fully or partially forgiven as discussed below.

The purpose of these loans is to allow small businesses to operate and maintain their payroll if harmed by COVID-19 from February 15, 2020 through June 30, 2020. These loans can be used for allowable payroll costs (including benefits), payments of interest on covered debt obligations, rent on covered rent obligations, and covered utility payments (electric, gas ,water and etc.). Covered expenses must have existed on or before February 15, 2020.

If the loan is used for the allowable payroll and non-payroll costs listed above over the eight week period after receiving the loan, then the loan may be eligible for full or partial forgiveness. The amount forgiven (or partially forgiven) will be reduced if you decrease your full-time employee headcount or if you decrease salaries and wages by more than 25% for any employee who made less than $100,000 annualized in 2019. You have until June 30, 2020 to restore your full-time employment and salary levels for any changes made between February 15, 2020 and April 26, 2020. In addition, recent guidelines released by the Treasury state that not more than 25% of the forgiven amount may be for “non-payroll costs.”

As stated previously, there has been $349 billion dollars allocated to this loan program and it seems it will be loaned on a first come, first served basis. We are not sure if this is this based on when you submit your application with the bank or the time they give your loan to the Small Business Administration (SBA) for approval.

To apply for this loan you should complete the application and submit it to your bank as soon as possible. Your bank will underwrite the loan and then submit it to the SBA for approval. Treasury has provided that small businesses and sole proprietorships can apply for the loans starting April 3, 2020 and independent contractors and self-employed individuals can apply staring April 10, 2020.

Visit the US Department of the Treasury’s website for further guidance.

Please contact us if we may be of assistance to you.