The paycheck Protection plan is a part of Coronavirus aid and economic security act which includes up to $349 billion in government-backed loans, to help small, medium, and other eligible applicants while continuing with the covering payroll costs, and certain expenses.
It depends on your average monthly payroll costs, you can be eligible for the loan up to $10 million as this is the part of the programme, but you must use the 75% to cover the payroll and other employee benefits. These benefits can be PTO insurance, premiums, retirements, etc.
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What is the eligibility for the PPP Loan?
As defined by the small business act all small business is eligible for the PPP loan. Some more can apply for the loan such as a business, a private nonprofit organization, veterans organizations, or any tribal business that doesn’t have more than 500 employees. Sole Propertiership, self-employed individuals and independent contractors can also apply for the same. An eligible business must have been in operations from 15 February 2020 and paying employees should be full time and part-time workers.
With the applications, the applicant needs to give some other things such as :
- Funds need to manage the payroll and to retain worker
- An applicant has not and will not receive any other loan under the program
- Uncertainty of the economic conditions make the loan requires important to help the ongoing operations of the applicant
How much can anyone borrow?
The eligible businessman can avail up to $10 million. The maximum loan amount is based on the average monthly payroll cost for the applicable lookback period, multiplied by 2.5, plus the amount of any outstanding EIDL loan made between 31 January 2020 and 3 April 2020.
The application form calculates the amount by using the below equation:
[Qualified average monthly payroll expenses x 2.5] + [EID , net of advance (if applicable )]=[PPP loan request]
If your business does not have payroll records for February 15, 2019, to 30 June 2019 and it is a new business your loan can be bassed on payroll from 1 January 2020 to February 20, 2020.
Eligible payroll expenses include compensation to employees, whose principal residence is in the U.S.A in below forms:
- salary, wages, compensation as well as cash tips capped at $100,000 on an annualized basis for each employee
- Allowance for dismissal
- Payment for state and loan taxes
- payment for retirement
Also, be remember that payroll expenses do not include below :
- Employee compensation over an annual compensation of $100,000 per year
- compensation for the employees who lied outside the U.S
- Employer share of certain payroll taxes
- Qualified sick and family leave under families first coronavirus response act
What can you pay using the PPP funds?
As everyone knows that this program is designed to help business owners to keep run their business on the payroll, the main use of the PPP loan should be to cover payroll related experience. It includes:
- Vacation, leave pay
- Retirement contributions
- Group health coverage premiums
- State and local tax
While applying you will surely be needed some documents and those documents are given below:
- Articles of incorporations for each borrowing entity
- Copy of each owner driving license
- The operating agreement for each borrowing entity
- payroll expense verification
- a certificate that all employees live in the U.S.A
- 12-month profit and loss statement
- proof of expenses like rent, interest payments on debts, and utility payments
From where you can apply?
You can apply for PPP loan through any approved SBA’s lender, credit unions, or any federally insured depository institutions. For more help get back to QuickBooks Helpdesk.
For more information or help dial +1844-313-4856 . QuickBooks Helpdesk is available for you 24*7 to support you. Experts are polite, professional, and have many years of experience in the same domain, and experts are a quick listener to solve your issues in a given time. You can also email at [email protected] and soon one of the technicians contact you with the resolution.