Second Round of Funding Provides More Assistance
After the initial funding for the Payroll Protection Program under the CARES Act ran out in just 14 days, Congress authorized an additional $370 billion dollars to the program. Officials say the funds are going much further in this round, as the average amount of the loans is significantly smaller. MCIS Law can help you take the right steps to secure funding for your business.
What Is the Payroll Protection Program (PPP)?
PPP is part of the $2 trillion-plus stimulus package known as the CARES Act (the Coronavirus Aid, Relief and Economic Security Act). It initially included almost $350 billion to assist “small business” owners by providing federally-guaranteed loans to cover payroll costs for two months. Under CARES, all small businesses (for-profit and non-profit) are eligible for the loans.
The loans have a two-year term and an interest rate of 1%, but no payments on the loan are required for the first six months. There are no fees associated with the loans, and business owners do not have to post collateral or provide a personal guarantee. At least 75% of the proceeds of the PPP loan must be used to cover payroll and employee benefits, but up to 25% may be used for utilities, rent, or mortgage payments. If the recipient follows those guidelines, the business will be eligible to have the loan fully forgiven. There are no tax consequences of having the loan forgiven.
How Does the Act Define “Payroll Costs”?
Most payroll costs are covered under the PPP, including the following:
- Wages and salary, including commissions (though there’s an annual cap of $100,000 per employee),
- Employee benefits, and
- State and local tax obligations on wages.
Payments to independent contractors do not qualify. Self-employed persons may obtain funding under the Payroll Protection Program, but they may need to provide additional documentation.
Contact MCIS Law to Learn Your Options under the Stimulus Package
At MCIS Law, PLLC, in Stafford, we provide comprehensive counsel to startup and existing businesses in southeast Texas. For a confidential consultation with an
experienced and knowledgeable lawyer, email us or call our office at (346) 297-0121. We are currently communicating with clients by phone, text message, and videoconference. We accept all major credit cards.