In 2020, the United States federal government passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. This economic stimulus bill is worth $2.2 trillion, with a decent amount of that directed to help small businesses. The Paycheck Protection Program (PPP) is part of that.
To find out more about who the Paycheck Protection Program recipients are, examine the guide below.
What is the Paycheck Protection Program?
As previously stated, the Paycheck Protection Program is part of the CARES Act. It was created to help small businesses stay afloat and keep their employees despite the economic hardship caused by COVID-19.
Initially, $349 billion was allocated to the PPP, but this was exhausted in just 13 days. Then, the federal government passed an enhancement act to the PPP to add $320 billion in funding.
As the global pandemic has changed and persisted, the federal government has worked to update this program. On December 21, 2020, the House and the Senate added another $284.5 billion in funding and restarted the application period.
Again, on March 26, 2021, President Biden signed the PPP Extension Act of 2021 into law, extending the application period for this program.
The Payroll That’s Protected
The types of payroll covered by PPP loans include:
- Sick leave
- Payroll taxes
- Hourly wages
- Retirement payments
- Health insurance premiums
- Independent contractor payments
The PPP loans are intended to help small businesses keep their full staff. If some staff are let go, the amount of loan forgiveness will decrease. However, if staff are rehired within a certain timeframe, complete loan forgiveness may still be granted.
The Loan Terms and Amounts
The maximum amount for a loan under this program is $10 million. However, amounts under $150,000 have a special process for loan forgiveness through the Small Business Administration’s (SBA) Direct Forgiveness Portal.
Some businesses were eligible to apply a second time as the PPP was enhanced and extended. You can learn from Cornerstone Capital Advisors about round two of PPP recipients.
Who are Paycheck Protection Program Recipients?
The recipients of PPP loans must own a business with fewer than 500 employees. Unfortunately, the funding for this program ran out in 2021 and has yet to be extended or enhanced for 2022.
Now, PPP recipients should be looking into loan forgiveness for the financial aid granted under this program. For loan recipients under $150,000, they submit through the SBA portal. Other recipients must submit their application to their lender.
Submitting the application, however, is laborious and time-consuming. It involves gathering all the documentation concerning how the loan was spent. For example, you will need things like:
- Payroll tax filings
- Unemployment insurance tax filings
- Bank account statements
- Payroll service provider report
- Statements reflecting contributions to retirement accounts
- Statements reflecting contributions to health insurance
Some applicants may even be asked for documentation of non-payroll related expenses.
Forgiving PPP Loans
Paycheck Protection Program recipients need to apply for loan forgiveness. There will be a lot of documentation required to prove the business retained their employees and their compensation amounts. The first step is to gather all these bank statements and tax forms.
If you found this guide helpful, take a moment to browse the other informative articles on our page.