[{"@context":"http:\/\/schema.org","@type":"Article","publisher":{"@type":"Organization","address":{"@type":"PostalAddress","postalCode":"91354","addressRegion":"California","addressLocality":"Valencia","addressCountry":"United States","name":"Money Done Right Address","streetAddress":"23890 Copper Hill Dr Ste 139","@id":"https:\/\/moneydoneright.com\/#PostalAddress"},"sameAs":["https:\/\/twitter.com\/moneydoneright","https:\/\/www.facebook.com\/moneydoneright\/","https:\/\/www.instagram.com\/moneydoneright\/","https:\/\/www.linkedin.com\/company\/money-done-right\/","https:\/\/www.pinterest.com\/moneydoneright\/","https:\/\/www.youtube.com\/c\/MoneyDoneRight"],"foundingLocation":"https:\/\/en.wikipedia.org\/wiki\/Santa_Clarita,_California","legalName":"Allec Media LLC","naics":"519130","parentOrganization":"https:\/\/moneydoneright.com\/#ParentOrganization","founder":{"@type":"Person","hasCredential":["https:\/\/cslainstitute.org\/","https:\/\/en.wikipedia.org\/wiki\/Certified_Public_Accountant"],"worksFor":{"@id":"https:\/\/moneydoneright.com\/#Organization"},"nationality":"https:\/\/en.wikipedia.org\/wiki\/Americans","jobTitle":"Founder","gender":"Male","alumniOf":["http:\/\/www.ucla.edu\/","https:\/\/en.wikipedia.org\/wiki\/Ernst_%26_Young","https:\/\/www.usc.edu\/"],"birthPlace":"https:\/\/en.wikipedia.org\/wiki\/Anaheim,_California","birthDate":"1988-08-04","givenName":"Logan","familyName":"Allec","sameAs":["https:\/\/loganallec.com\/","https:\/\/twitter.com\/loganallec","https:\/\/www.facebook.com\/logan.allec","https:\/\/www.instagram.com\/loganallec\/","https:\/\/www.youtube.com\/channel\/UC3Jg7eUCBPsjX13X7kTW1hQ"],"email":"logan.allec@moneydoneright.com","description":"Logan Allec is a practicing Certified Public Accountant, Certified Student Loan Professional, and the founder of personal finance blog Money Done Right.  He provides a second level of review for the site\u2019s more technical articles, particularly those pertaining to taxation, credit, and student loans. He also educates thousands of people every week on The Money Done Right Show.","name":"Logan Allec","image":"https:\/\/moneydoneright.com\/wp-content\/uploads\/2020\/01\/Logan-Allec-Money-Done-Right.jpg","spouse":"https:\/\/moneydoneright.com\/author\/caroline-allec\/","url":"https:\/\/moneydoneright.com\/author\/logan-allec\/","@id":"https:\/\/moneydoneright.com\/author\/logan-allec\/"},"email":"support@moneydoneright.com","logo":{"@type":"ImageObject","width":"60","height":"488","name":"Money Done Right Logo","url":"https:\/\/moneydoneright.com\/wp-content\/uploads\/Money-Done-Right-Personal-Finance-and-Investing-Blog.png","@id":"https:\/\/moneydoneright.com\/#ImageObject"},"name":"Money Done Right","additionalType":"Blog","publishingPrinciples":"https:\/\/moneydoneright.com\/methodology\/","url":"https:\/\/moneydoneright.com\/","@id":"https:\/\/moneydoneright.com\/#Organization"},"video":[{"@type":"VideoObject","embedUrl":"https:\/\/www.youtube.com\/embed\/yhQBUX0cdPs","uploadDate":"2020-03-30","thumbnailUrl":"https:\/\/i.ytimg.com\/vi\/yhQBUX0cdPs\/maxresdefault.jpg","contentUrl":"https:\/\/youtu.be\/yhQBUX0cdPs","duration":"P0Y0M0DT0H11M23S","description":"In this video I walk you through the SBA Disaster Loan Application step by step.  This is also the same application for the $10,000 advance.","name":"SBA Disaster Loan Application STEP BY STEP (FULL WALKTHROUGH)","@id":"https:\/\/moneydoneright.com\/paycheck-protection-program\/#VideoObject1"},{"@type":"VideoObject","embedUrl":"https:\/\/www.youtube.com\/embed\/phAOCfxZqUE","uploadDate":"2020-04-03","thumbnailUrl":"https:\/\/i.ytimg.com\/vi\/phAOCfxZqUE\/maxresdefault.jpg","contentUrl":"https:\/\/youtu.be\/phAOCfxZqUE","duration":"P0Y0M0DT0H14M30S","description":"In this video, Logan Allec explains his analysis on the Paycheck Protection Program, how to apply, loan calculations, and more.","name":"Paycheck Protection Program: How to Apply, Loan Calculation, and More","@id":"https:\/\/moneydoneright.com\/paycheck-protection-program\/#VideoObject2"}],"mainEntityOfPage":"https:\/\/moneydoneright.com\/paycheck-protection-program\/","author":{"@id":"https:\/\/moneydoneright.com\/author\/logan-allec\/"},"image":"https:\/\/moneydoneright.com\/wp-content\/uploads\/Paycheck-Protection-Program.jpg","name":"Paycheck Protection Program Article","description":"The article explains what you need to know about the Paycheck Protection Program","articleBody":"I was up until midnight last night poring over the Treasury Department\u2019s Interim Final Rule for the PPP loans, and I\u2019m going to share with you what I learned.  Here\u2019s what I\u2019m going to do in this article:  First, I will briefly give some context to the CARES Act as it relates to small business owners. Second, I will briefly discuss the SBA EIDL Disaster Loans. Third, I will discuss in detail the Paycheck Protection Program loan.The CARES Act March 13: The Emergency Declaration On March 13, Trump deemed the current crisis of sufficient severity and magnitude to warrant an emergency declaration for all states, territories, and the District of Columbia.  March 27: The Legislation Exactly two weeks later, on March 27, the president signed the CARES Act to provide emergency assistance to individuals and businesses affected by the crisis.  The SBA\u2019s Authority As a part of this legislation, the SBA \u2014 in order to assist small businesses during this troubled time \u2014 was given $349 billion worth of funding and authority to:  Modify existing loan programs, i.e. the EIDL disaster loan program, and Establish a new loan program \u2014 i.e. the PPP Paycheck Protection Program. Economic Injury Disaster Loans (EIDL) Now I will briefly discuss the EIDL Disaster Loans.  EIDL Basics Here are the basics of the EIDL Disaster Loans:  Direct federal loans of up to $2,000,000 Terms up to 30 years 3.75% interest rate for for-profit businesses Personal guarantee required for loans more than $200,000 $10,000 forgivable advance The point of this loan is to sustain your business for six month to cover costs like payroll, rent, mortgage, material costs, and preexisting debt.  If there is a need to extend that six-month period, it will be communicated by the government going forward.  $10,000 Forgivable Advance Of course, what everyone\u2019s talking about with respect to the disaster loans is the immediately forgivable $10,000 advance that supposedly hits your bank account within three days of applying for EIDL on the SBA\u2019s website.  That said, this grant is up to $10,000.  The disaster loan officer will determine how much you actually should get based on your application.  Also, even if you are found to be ineligible for the full EIDL loan, you can still keep the forgivable advance.  The EIDL disaster loan is made directly by the SBA, and it has a very simple application right on the SBA\u2019s website.  Earlier this week I made a 10-minute video walking through the EIDL application step-by-step.  You can check it out below.  Paycheck Protection Program (PPP) Loans The first thing you need to know about PPP loans is that they are not direct loans from the feds.  They\u2019re more like an SBA 7(a) loan.  SBA is guaranteeing 100% percent of these loans, but they will be made through SBA-approved lenders.  And your SBA lender will service your loan  Also, PPP loans are in fact \u201cfirst-come, first-served\u201d \u2014 that is the phrase used by the Treasury Department in its interim final rule.  PPP Basics Terms of up to 2 years 1% interest rate.  0.5% was thrown around earlier this week, but Treasury came out with this and said 1%. No payments for six months.  The Act said the deferment period could go up to a year, but SBA said look we think six months is appropriate for now. Interest accrues during this six-month deferment. Forgivable in whole or in part Can You Get Both EIDL and PPP? You can get both EIDL disaster loan and PPP paycheck protection program loans, but their proceeds can\u2019t be used for the same purpose, and you can refinance your EIDL loan into a PPP loan.  Forgiveness The best part of the PPP loans?  Forgiveness.  The CARES Act said that the the full principal amount of the loan and any accrued interest can be forgiven if you use all of the loan proceeds for forgivable purposes and employee and compensation levels are maintained, that is, you don\u2019t apply for this loan based on your previous 12 months\u2019 payroll and then fire everybody.  Remember, payroll is the priority here \u2014 it\u2019s called the Paycheck Protection Program.  The whole point of these loans is to keep the lights on in your business and to keep people working.  In light of this, the SBA and the Treasury Department have said that no more than 25% of the loan forgiveness amount may be attributable to non-payroll costs.  When the Program Starts The first day to apply for a PPP is today, April 3, and this program is running through June 30 or until funds are exhausted, that\u2019s what they\u2019re saying right now.  Now although today is the official \u201cstart date\u201d for PPP, most SBA lender banks are not ready, especially the old school brick and mortar banks.  There is a lending platform that I am sending clients to that matches borrowers with SBA lenders for PPP loans for free.  Eligibility for PPP Loans Here are the eligibility requirements for PPP Loans:  You must be a small business, meaning 500 or fewer employees whose principal residence is in the United States.  There are exceptions for some businesses in certain industries with greater than 500 employees, but if you own such a business, I assume you have in-house legal and\/or financial counsel to consult with about this. You had to be in operation on February 15, 2020, and you either had employees to whom you paid salaries and payroll taxes, or you paid independent contractors, reporting their income on Form 1099-MISC.  If you yourself are a sole proprietor or independent contractor, meaning even if you\u2019re a one-man or one-woman show and you file Schedule C, you\u2019re eligible, as long as you were in operation on February 15, 2020. You cannot be incarcerated, on probation, or parole, or have been formally charged with a crime or been convicted of a felony within the last five years. You or your business cannot have ever been delinquent or defaulted on an SBA loan or any other government-backed loan. Loan Amount Calculation Take your payroll costs from the last twelve months for employees whose principal place of residence is the United States. Subtract any compensation paid to an employee in excess of an annual salary of $100,000.  If you\u2019re a one-man or one-woman show who doesn\u2019t have payroll but just has self-employment income, subtract any of your earnings that are in excess of $100,000 for the last twelve months. Then you have that number, those total payroll costs less amounts greater than $100,000.  Divided that number by 12. Multiply that new number by 2.5. Add the outstanding amount of any EIDL disaster loan that you received between January 31, 2020 \u2014 that\u2019s when the \u201cdisaster\u201d began \u2014 and April 3, 2020.  This is EIDL received, not applied for.  I doubt many of you have actually received an EIDL right now. What Are Payroll Costs? The definition of payroll costs for PPP purposes is broad and includes:  W-2 wages paid to employees whose principal place of residence is within the United States, including wages paid to yourself Tips Severance Benefits, including health insurance coverage, insurance premiums, retirement contributions State and local taxes assessed on compensation of employees (but note that FICA taxes \u2014 Social Security and Medicare taxes you pay for your employee \u2014 do not count) Of course, if you\u2019re a one-man or one-woman show, your payroll costs are your net income from self-employment.  Are Independent Contractors Included in Payroll for PPP Purposes? Payroll costs do not include payments to independent contractors on pay on 1099.  I am reading verbatim from the Treasury Interim Rules published yesterday: \u201cDo independent contractors count as employees for purposes of PPP loan calculations?  No, independent contractors have the ability to apply for a PPP loan on their own so they do not count for purposes of a borrower\u2019s PPP loan calculation.\u201d  That\u2019s what Treasury said.  You can take it or leave it.  I know some advisors right now telling people to just screw it, put the independent contractors on there, and let them tell us we\u2019re wrong.  I\u2019m not going to tell you what to do here, but Treasury has explicitly stated that you can\u2019t include payments to independent contractors.  Use of PPP Proceeds Treasury has said that PPP loan proceeds can be used for:  Payroll costs as defined previously, and at least 75% of the PPP loan proceeds must be used for payroll costs Costs related to the continuation of group health insurance Mortgage interest payments.  Note that I was on an SBA webinar yesterday, and they said if you work from home and you get a home office deduction on your taxes, part of your home mortgage interest could apply.  Note that this is not from Treasury; it is simply what my local SBA told me in a webinar yesterday. Rent payments Utility payments Interest payments on pre-existing debt (pre-existing meaning incurred before February 15, 2020) Refinancing an EIDL loan into a PPP loan If you use PPP loan proceeds for other things, you\u2019re in trouble.  You\u2019ll have to repay those amounts, and you may be in even bigger trouble if you really tried to game the system here.  How to Apply So today, April 3, is the day when small businesses and sole proprietorships can theoretically apply for SBA loans, but very few if any banks are ready for this.  A week from today April 10 is when independent contractors and self-employed individuals can apply.  Now, if you have an existing relationship with an SBA lender, reach out to them.  See what they say, but keep in mind that most banks are not ready today.  Also, most big banks are requiring that you have a pre-existing commercial relationship with them.  I got an email from a big bank where I have my business checking account, and they said I must have already had a relationship with them as of February 15.  But, like I mentioned earlier, there is a lending platform that I am sending clients to that matches borrowers with SBA lenders for PPP loans, and it\u2019s free for you to use.  Unless you\u2019re already buddy-buddy with an SBA lender, I really think this is the way to go, because unless you already have a great relationship with an SBA lender, you could end up waiting for weeks for your app to be considered by one single lender.  Good luck, small business owners of America!","headline":"Paycheck Protection Program: What You Need to Know","datePublished":"2020-04-03","dateModified":"2020-05-04","@id":"https:\/\/moneydoneright.com\/paycheck-protection-program\/#Article"},{"@context":"https:\/\/schema.org\/","@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"name":"Taxes","item":"https:\/\/moneydoneright.com\/taxes\/#breadcrumbitem"},{"@type":"ListItem","position":2,"name":"Business Taxes","item":"https:\/\/moneydoneright.com\/taxes\/\/business-taxes\/#breadcrumbitem"},{"@type":"ListItem","position":3,"name":"Paycheck Protection Program: What You Need to Know","item":"https:\/\/moneydoneright.com\/taxes\/business-taxes\/paycheck-protection-program\/#breadcrumbitem"}]}]