New Guidance Issued by U.S. Department of the Treasury
The U.S. Department of the Treasury has launched a website (which you can view here) with information and links regarding relief available for individuals and business owners under the newly passed CARES Act.
Most notably, the website provides more information about the Paycheck Protection Program (PPP) pursuant to which the government has authorized up to $349 billion toward job retention and other expenses of small businesses. The application for small businesses to apply for the PPP loan is now available and can be found here. The application period for small businesses and sole proprietorships will begin on April 3, 2020, and for independent contractors and self-employed individuals will begin on April 10, 2020.
The application requires basic information about the business, Owners of the business (defined below), and requires certain certifications. Businesses or any Owners of businesses are ineligible for the loans under the PPP program if a business or any Owner is presently suspended, debarred, proposed for debarment, declared ineligible, or voluntarily excluded by any Federal department or agency, or presently involved in any bankruptcy, or if the Business or any of its Owners or any business owned or controlled by any of the Owners of the business have ever obtained a direct or guaranteed loan from SBA or any other Federal agency that is currently delinquent or has defaulted in the last 7 years and cause a loss to the government. Additionally, if any individual or Owner is presently subject to an any formal criminal charges brought in any jurisdiction, or is presently incarcerated or on probation or parole, or within the last 7 years has been convicted, pleaded guilty, nolo contendere, placed on pretrial diversion or on any type of parole or probation, the business is likewise not eligible for a loan under PPP.
“Owners” of the business are defined as:
- sole proprietors of a sole proprietorship
- all general partners and all limited partners owning 20% or more of the equity of the company;
- all owners of 20% of more of a corporation;
- all members owning 20% of more of a limited liability company; and
- any Trustor (if the business is owned by a trust).
There are some differences in the PPP and what was originally stated in the CARES Act:
- The average monthly payroll determination to calculate loan amount will be based upon the calendar year 2019.
- The PPP application states that the lender will calculate the eligible loan amount using the tax documents submitted. Though not specified, this will likely include payroll tax returns, income tax returns, W-2 forms or 1099s MISC forms.
For medium and large-sized businesses and non-profits, the CARES Act has also created Economic Stabilization and Assistance Loans.
You can find out more information about the PPP program in a previous client alert that Tannenbaum Helpern Syracuse & Hirschtritt LLP provided here.
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