The Coronavirus Aid, Relief and Economic Security Act (CARES Act) provides for the Paycheck Protection Program (PPP). Funding for this program is limited and businesses apply for loans through their business lender. Applications will be processed on a first-come, first-served basis. The following will help you determine the information to gather for the computation of relevant amounts and numbers to enter on the Application.
Information to Gather
- Gross payroll paid to employees during 2019. Gather your Quarterly Form 941s for 2019, as well as the Year-To-Date 12/31/2019 payroll register. Gross payroll includes salaries, wages, commissions, cash tips, vacation, parental, family, medical or sick leave, paid by the Employer.
- Determine the individuals with gross wages over $100,000 in 2019.
- Compile a summary of all group health insurance premiums paid for by the Company during 2019. Do not include the portion of premiums that was paid using withholdings from employee paychecks.
- Compile a summary of all 401k matching and other retirement contributions paid during 2019.
- Compile a summary of all state unemployment taxes (SUTA) paid during 2019, including copies of the
forms filed with the State.
- If the Company is organized as a Partnership, compile guaranteed payments to partners in 2019
(maximum of $100,000 per individual partner).
- Compile gross wages paid to individuals whose principal place of residence is outside of the U.S.
Copies of this documentation (items #1-7 above) must be provided to the lender.
Additional Information to Gather for the Lender
- 2019 Company financial statements
- Interim Company financial statement for January 1, 2020 – February 28, 2020
- Most recent monthly statements for mortgages and commercial loans
Restriction on Use of PPP Loan Proceeds
Proceeds must be used for: payroll costs, mortgage interest payments, rent and utilities. The amount of the proceeds used for these expenses in the 8-week period following origination of the loan must be tracked by the Company. The support (payroll reports, invoices, statements, etc.) will then be provided to the lender with the application for loan forgiveness. No more than 25% of the proceeds can be used for nonpayroll costs.
A business obtaining a loan through the PPP will not be able to use the payroll tax credits available under the Employee Retention Tax Credit (ERTC) or the payroll tax payment deferral program. Make sure you continue to make your payroll tax payments timely if you are applying for this loan.
If you have any questions about how the information in this article may affect you or your business, please reach out to our specialists using the form below.