CARES Act - Paycheck Protection Program (PPP) FAQ

On March 27, 2020, President Trump signed into law the CARES Act. The Act created the Paycheck Protection Program (PPP) administered by the Small Business Administration (SBA) that enables employers to obtain forgivable loans to maintain continuity of business expenses.

Who is eligible?

All employers, including the self-employed, independent contractors and sole proprietors, with 500 or fewer employees are eligible for loans under the PPP. Wealth management practices are eligible for assistance.

How much can be borrowed?

The amount that can be borrowed is equal to the lesser of two options.

  • Option A:
    • 2.5 times the average monthly payroll expenses for the twelve months prior to the date of the loan
  • Option B:
    • $10,000,000

What constitutes Payroll Costs?

Payroll costs include the sum of the following:

  • Salary, wage, commission, or similar compensation (capped at $100,000 on an annualized basis for each employee);
  • Payment of cash tip or equivalent;
  • Payment for vacation, parental, family, medical, or sick leave;
  • Allowance for dismissal or separation;
  • Payment required for the provisions of group health care benefits, including insurance premiums;
  • Payment of any retirement benefit; or
  • Payment of state or local tax assessed on the compensation of employees.

What is Specifically Excluded from Payroll Cost?

For purposes of determining the payroll cost, the following are not included in the sum:

  • The compensation of an individual employee in excess of an annual salary of $100,000, as prorated for the “covered period” (February 15, 2020 to June 30, 2020);
    • For employees making over $100,000, the employer can include $100,000 in the calculation.
  • Taxes imposed or withheld under chapters 21, 22, or 24 of the Internal Revenue Code during the covered period;
  • Any compensation of an employee whose principal place of business is outside the United States;
  • Qualified sick leave wages for which a credit is allowed under section 7001 of the Families First Coronavirus Response Act (the “FFCRA”); or
  • Qualified family leave wages for which a credit is allowed under section 7003 of the FFCRA.

How are loan proceeds required to be utilized to be forgiven?

Loan proceeds are to be utilized for Payroll Costs (as defined).

In addition, proceeds can be applied to:

  • Group healthcare benefits
  • Insurance premiums
  • Utilities for which service began before February 15, 2020
  • Interest (but not principal) on mortgages or other debt incurred prior to February 15, 2020
  • Rent on any lease in force prior to February 15, 2020 and utility payments

NOTE: No more than 25% of loan forgiveness may be attributable to non-payroll costs.

How do I get forgiveness on my PPP loan?

Each PPP borrower must apply through your lender for forgiveness on your loan. In this application, you must include:

  • Documentation verifying the number of employees on payroll and pay rates, including IRS payroll tax filings and state income, payroll and unemployment insurance filings.
  • Documentation verifying payments on covered mortgage obligations, lease obligations, and utilities.
  • Certification from a representative of your business or organization that is authorized to certify that the documentation provided is true and that the amount that is being forgiven was used in accordance with the program’s guidelines for use.

NOTE: The lender must make a decision on the forgiveness within 60 days.

Deferment of PPP Loans

Employers are eligible for payment deferment for 6 months.

NOTE: Interest will continue to accrue during the deferment period.

What collateral will be required?

No collateral from the business or its owners is required.

What are the rates, terms and conditions of a PPP Loan?

  • Loans maturity is 2 years
  • No personal guarantee required
  • No collateral required (the loan is unsecured)
  • 1.00%
  • No pre-payment fees

What restrictions will be placed on my business as a result of accepting a PPP Loan?

Businesses may not issue dividends for up to a year after the loan is no longer outstanding and must retain 90% of employment levels as of March 24 "to the extent practicable" through September 30, 2020.

What banks will be funding PPP loans?

All current SBA banks plus the Administrator and Secretary of the Treasury shall designate as Additional Lenders those that have the "necessary qualifications to process, close, disburse and service loans" made with the guarantee of the SBA. SkyView Partners has a national network of lenders who currently fund advisor loans prepared to provide assistance.

What is required to apply for a PPP loan?

Employers will be required to self-certify:

  • that the uncertainty of current economic conditions makes necessary the loan request to support the ongoing operations of the employer;
  • acknowledging that funds will be used to retain workers and maintain payroll or make mortgage payments, lease payments, and utility payments;
  • that the employer does not have an application pending for a PPP loan for the same purpose and duplicative of amounts applied for or received under a PPP loan; and
  • during the period beginning February 15, 2020 and ending on December 31, 2020, that the employer has not already received amounts under the PPP.

What documentation does each applicant need to supply?

Applicants need to complete the PPP Loan Application. Click here for the application.

Employers will need to provide the following source documentation:

  • Documentation verifying the number of full-time equivalent (“FTE”) employees on payroll and pay rates for the period of 8 weeks after getting this loan (including payroll tax filings)
  • Documentation confirming rent, utilities or mortgage interest payment amounts
  • Certification from the employer confirming the truth of the documentation
  • Any other documentation your lender may request

When do I need to apply?

  • Starting April 3, 2020, small businesses and sole proprietorships can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders.
  • Starting April 10, 2020, independent contractors and self-employed individuals can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders.
  • Other regulated lenders will be available to make these loans as soon as they are approved and enrolled in the program.

Applications must be submitted to an approved lender by June 30, 2020.

How long will it take to receive the PPP loan proceeds?

The time to fund a PPP loan will depend on the efficiencies implemented around processing PPP loans of the bank you choose. Our staff can help you identify banks that are funding with greatest efficiency.

Can I get more than one PPP loan?

No, an entity is limited to one PPP loan. Each loan will be registered under a Taxpayer Identification Number with the SBA to prevent multiple loans to the same entity.

EIDL – PPP Loan Assistance Comparison

The CARES Act announced modifications to the existing Economic Injury Disaster Loan Assistance (EIDL) program for small business owners in all US states. To determine which program best fits your needs, please visit our Paycheck Protection Program (PPP) and Economic Injury Disaster Loan Assistance Program (EIDL) comparison via the link below.

How to Apply

1. Apply

Please complete the online application below

2. Confirmation

You will receive an email confirming receipt of your application with a secure link to upload required documentation

3. Upload

Please open the link embedded in your confirmation and download documents specified in the portal

DISCLAIMER: SkyView Partners, LLC does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction contemplated by the foregoing.