Though the new coronavirus has drastically affected us all, small business owners, in particular, have taken a serious hit. Because of this, the Coronavirus Aid, Relief, and Economic Security Act is providing about $2 trillion in emergency funds, part of which includes the Paycheck Protection Program (PPP), designed to provide small businesses $349 billion worth of loans. Please continue reading and speak with our knowledgeable New Jersey business law attorneys today to learn how this program may help you.
What Is the Function of PPP?
Starting on April 3, 2020, small businesses can now apply for these loans, while independent contractors and self-employed individuals were allowed to apply on April 10, 2020. These loans should cover small businesses’ payroll and other designated expenses.
How Much Money in Loans Can I Borrow?
If you own a small business, under PPP, you may borrow up to 250 percent of your average monthly payroll expenses not exceeding $10 million. This should cover up to eight weeks of payroll expenses, as well as payments for certain debt obligations your business may have incurred. You may use these loans for expenses from anywhere between February 15, 2020, and June 30, 2020.
Are These Loans Forgivable?
The amount the forgivable loan’s principal after 8 weeks is equal to the sum of the following expenses:
Payroll, including your employee’s salaries up to an annual rate of pay of $100,000, hourly wages and cash tips, group health insurance premiums, and paid sick or medical leave.
Existing interest payments on mortgages
Utility service agreements
Though small business owners may use these PPP loans for other business-related expenses, they may not be forgiven. That being said, as long as the full principal of the loan is forgiven, the borrower will not have to pay back any interest accrued in the covered period. The remainder of the unforgiven loan will be paid back based on the terms the business and the lender agreed upon.
When Do I Have to Apply for A PPP Loan?
You will have to apply by June 30, 2020, if you wish to receive a PPP loan. For any additional questions, please do not hesitate to reach out to our knowledgeable New Jersey business law attorney. We are here to help you and your small business through these turbulent times.
Contact Our Experienced New Jersey Firm
Juan C. Velasco, Esq. is a trusted attorney who concentrates on bankruptcy, family law, real estate, and estate matters who has been serving the New Jersey area for over 20 years. That is why we are confident we have what it takes to provide you with the effective legal counsel you need. If you need experienced legal counsel, please contact Velasco Law Office and we will be happy to assist you.