Paycheck Protection Program (PPP)

Program included in the CARES Act to encourage practices not to furlough or layoff employees…basically, if you keep your employees on the payroll, under certain conditions, the funds from loans issued pursuant to the PPP are used for the purposes listed above, the principal balance is eligible for loan forgiveness.

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Does this require that you keep your payroll at 100%? 75%? or a certain percentage of your average? What about the EIDL? Does it have those requirements?

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Re:PPP It looks like we could use the loan to cover payroll and rent for 2 months and have that forgiven. Am I reading it correctly? Why wouldn’t everyone do that?

I’m thinking the PPP program is the way to go…much cleaner with the potential for loan forgiveness…Still running some comparisons for one particular practice but I suspect there will be no universal suggestion as to which option is better since everyone’s situation is unique.

Looking at the text of a few other sources, there appear to be a lot of technical things related to the PPP qualification, amounts involved, and forgiveness features. I’m starting to see more information being sent out by accounting firms and payroll processors and suspect that we should see more guidance being posted within a couple of days…once I find some reliable guidance, I’ll post it here.


For those who have already reduced their staff via lay-off or furlough…

if a Borrower “reverses” any headcount or salary reductions prior to June 30, 2020, the Borrower’s eligibility for loan forgiveness may be preserved.

Additionally, a business will not need to demonstrate that it is unable to obtain credit elsewhere. Rather, lenders may only consider whether an applicant was in operation on February 15, 2020, and had employees for whom the applicant paid salaries and payroll taxes.

With the PPP loan, do we need to immediately keep everyone at 75% of their hours? Or do we need to do that by June 30? Or during the time period of the loan?

Our accountant recommended the PPP loan over the EIDL because they thought the EIDL loans would not be potentially forgivable. Does that sound correct?

That’s the part I’m struggling to confirm…my gut tells me that the intent behind the legislation is to keep everyone fully employed and there may be something in the nitty gritty details…a strong argument could be made that the reduction in staff was equal to or less than the reduction and business- which would reduce the amount of assistance being requested. But until we find credible info confirming this, it remains speculation.

From the federal document below, just to keep things confusing!

“These grants provide an emergency advance of up to $10,000 to small businesses and private
non-profits harmed by COVID-19 within three days of applying for an SBA Economic Injury
Disaster Loan (EIDL)…The advance does not need to be repaid under any circumstance, and may be used to keep employees on payroll, to pay for sick leave, meet increased production costs due to
supply chain disruptions, or pay business obligations, including debts, rent and mortgage
Small Business Owners Guide to the CARES Act final.pdf (237.6 KB)

Chip, I only saw that info under the EIDL loan. Not the PPP. Is it available for both?

Paycheck Protection Program (PPP) – Same as the SBA 7(a) Loan

The Program provides that businesses with fewer than 500 employees – including sole proprietors and nonprofits – will have access to loans under Section 7(a) of the Small Business Act during the “covered period”, which runs from February 15, 2020 through June 30, 2020.

The maximum loan is the lesser of:

  • The sum of 1) average monthly “payroll costs” for the 1 year period ending on the date the loan was made (an alternative calculation is available for seasonable employers) multiplied by 2.5, and 2) any disaster loan (discussed below) taken out after January 31, 2020 that has been refinanced into a paycheck protection loan; or
  • $10 million.

The PPP program as I understand it only covers forgiveness for 8 weeks. If we participate in this program for April and May and if the business impact of COVID-19 lasts longer than that, can we then start reducing employee pay below the 25% threshold without losing the forgiveness provision?

This is mere speculation…many people smarter than me (and reliable) suspect that if things drag out past two months, Congress will be compelled to revisit the program and consider expanding it for a longer period of time. Only time will tell. I’d focus on getting through the next few months and then go from there…

I know this is about PPP.

But Can I ask any one, If we as an employee of a small business took Less salary

  1. Can we get any benefit from PPP
  2. Can we apply for unemployment benefit for working reduced hours and taking less salary>

I did some research from MGMA and confirmed much of what was stated. Concept and intent is a forgiveness for small business loans for retaining employees.

The bill creates a “paycheck protection program” that would provide 8 weeks of cash-flow assistance through federally guaranteed loans to small employers, including medical groups, who maintain their payroll during this emergency. If the medical group maintains payroll, the portion of the loans used for covered payroll costs, interest on mortgage obligations, rent, and utilities would be forgiven, helping workers remain employed. The loan period is retroactive to Feb. 15, 2020 and extends through June 30, 2020.

Assuming from this information that practices can obtain the loans from 2/15/20 - 6/30/20. If true, that gives practices options to either apply ‘right now’ if in quick need or take some time to analyze the details and apply prior to June 30th.

So I have already laid off 4 employees out of 12 . I just laid them off 2 weeks ago, Does that mean I have to re-hire them right away to qualify for the PPP. We dont know how soon these funds will be available realistically and I would still have to make payroll during the wait

There’s a lot of uncertainty but suspect things will be more clear a week from now. The reality is that practices will still need to manage their cash flow as I suspect it will take a while for SBA to process paperwork and get things ready for the bank to release funds, etc.

I’d suggest making a good cash flow estimate for the next eight weeks…call your banker to see if they would provide (or extend) your line of credit to cover the next few months…many banks are willing to work with practices to help them out knowing that if they can bridge the cash flow, it’s keeps practices open and PPP provides some funding to pay off the line of credit when the funds are received, etc. While expecting to get PPP funds is not a guarantee that the practice can pay back the line of credit, banks are highly motivated to help make sure you stay in business.

To be clear, that’s the only place I saw it. I replied in reference to @Paulie’s comment about whether those loans would be forgiven.

I received the attached, which summarizes all the above points well. I’m sure the devil is in the details, but sounds like a great deal for most small businesses. small business stimulus implementation plan.pdf (200.4 KB)

Is there a website to apply for the paycheck protection loan ? What are the needed documents ?