PPP & Business Stimulus Money
What is the SBA Paycheck Protection Program?
On December 27, a second round of stimulus legislation was signed into law. It included additional funding for the PPP as part of the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act. The Act has significant impacts to the PPP, including approximately $284 billion for additional lending and streamlined forgiveness for loans of $150,000 or less. The stimulus is available for small businesses with fewer than 300 employees (Independent Farmers, Sole Proprietors, Partnerships, and small businesses all are eligible). The program was established to serve as income replacement for individuals as well as protect jobs that were or may encounter impact from economic uncertainty.
Give us a call at 800-667-5202 or e-mail our team at firstname.lastname@example.org to learn more. Below are FAQs about the PPP program:
Am I or is my business eligible?
- First-time borrowers will be eligible to apply for a loan of up to $10 million, under similar criteria from the initial round
- Businesses and entities in operation on February 15, 2020 (and have not permanently closed)
- Farmers, Independent Contractors, Sole Proprietors, Small businesses, 501(c)(3) nonprofits, 501(c)(19) veterans organizations or tribal business concerns that have fewer than 500 employees or otherwise meet the SBA size standard
- Businesses in the accommodation and food service sector that employ 500 or fewer employees per physical location
- Entities such as housing cooperatives, tax-exempt “business league” organizations under Internal Revenue Code section 501(c)(6), news organizations, and destination marketing organizations are now eligible, subject to additional requirements
How much would I be eligible for?
Stimulus funds are up to 2.5 months of an employee average income or business owner’s income (excluding S and C corps) and are calculated based on the below using either 2019 or 2020 (wages and income capped at $100,000):
- Farmers (Schedule F)
[Line 9 (Gross Income) on Schedule F Tax Return] divided by 12 times 2.5. For example: Gross income of $20,000 would result in a stimulus amount of $4,166. Individual farmers with gross income of $100,000 or more would be eligible for $20,833.
- Independent Contractors or Sole Proprietors (Schedule C)
[Line 31 (Net Income) on Schedule C Tax Return] divided by 12 times 2.5. For example: Net income of $20,000 would result in a stimulus amount of $4,166. Individuals with net income of $100,000 or more would be eligible for $20,833.
- Small businesses with employees (Schedule C)
[Line 31 (Net Income) on Schedule C Tax Return + Employees (Receive W2) Annual Gross wages] divided by 12 times 2.5. For example: Net income of $20,000 and Employee wages of $200,000 would result in a stimulus amount of $45,833.
- Partnership (1065 Form with K1 Income).
[Sum of partners Box 14a on K1s] multiplied by 0.9235] + Employees (Receive W2) Annual Gross wages] divided by 12 times 2.5. For example: Total K1 partner income of $100,000 would result in a stimulus amount of $19,239.
- S or C Corp with employees (1120 and 1120S)
[Employees (Receive W2) Annual Gross wages] divided by 12 times 2.5. For example: Employee wages of $200,000 would result in a stimulus amount of $41,666.
*Each individual employees wages are capped at $100,000 annually
How does the program work?
Phelps County Bank will be supporting all the below steps and we have a dedicated team to answer any questions you may have or provide guidance to achieve full forgiveness.
- Step 1: Complete one of the applications below.
APPLY - First time participating
APPLY - Second time participating
- Step 2: A PCB representative will review the application and request additional supporting documents that are needed.
- Step 3: Submit application to SBA and receive approval.
- Step 4: Fund your account that you have provided with the funds applied for.
- Step 5: Apply for forgiveness following the covered period of 8 to 24 weeks.
How can I or my business use the funds?
- For individuals (Farmers, Sole Proprietors, Independent Contractors), the funds can be spent as income replacement on any needs for the individual. Forgiveness will be based off 2019 or 2020 tax return owner’s compensation based on the calculations above and no additional documentation is needed showing spend.
- For businesses with employees, 60% of the funds need to be spent on employee payroll with the remainder eligible to be spent on approved business expenses (Mortgage Interest, Rent or Lease payments, Utilities).
Questions? Give us a call at 800-667-5202 or e-mail our team at email@example.com