Stimulus aid can include small businesses, farm operators to help retain employees
The Paycheck Protection Program as part of the recent approved $2 trillion stimulus plan has authorized $349 billion in forgivable loans for small business to pay their employees during the COVID-19 crisis, according to information from the U.S. Treasury.
The businesses with 500 or fewer employees are defined as nonprofits, veterans organizations, tribal business concerns, sole proprietorships, self-employed individuals and independent contractors. According to the American Farm Bureau Federation, the program also applies to farmers and ranchers. Wages paid to H-2A workers do not count toward a farm’s payroll cost. Also independent contractors neither count toward payroll costs nor toward the number of the operation’s employees. Independent contractors are eligible to apply for their own Paycheck Protection Program loan, according to the AFB.
General provisions of the program is that loan amounts will be forgiven as long as:
• Loan proceeds are used to cover payroll costs and most mortgage interest rent and utility costs over the eight-work period after the loan is made; and
• Employee and compensation levels are maintained.
Payroll costs are capped at $100,000 on an annualized basis for each employee. Due to the likely high enrollment, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs. Loan payments will be deferred for six months. Loan forgiveness will be reduced if the applicant decreases his or her full-time employee head count. Loan forgiveness will be reduced if the applicant decreases salary. It may also be reduced if the employer decreases salaries and wages by more than 25% for any employee who made less than $100,000 annualized in 2019.
Starting April 3, small businesses and sole proprietorships could apply for and receive loans to cover their payroll and other certain expenses through existing Small Business Administration lenders. Starting April 10, independent contractors and self-employed individuals can apply for and receive loans through SBA. Other regulated lenders will be available to make these loans as soon as they are approved and enrolled in the program. Applications can be made through any existing SBA lender or through any federally insured depository institution, federally insured credit union and Farm Credit System institution that is participating. Other regulated lenders will be available to make the loans once they are approved and enrolled in the program. Applicants should consult with a local lender as to whether it is participating. A list is available at www.sba.gov.
Loans can be for up to two months of your average monthly payroll costs from the last year plus an additional 25% of that amount. The amount is subject to a $10 million cap. If the applicant is seasonal business or a new business, he or she will use different applicable time periods for the calculation.
Dave Bergmeier can be reached at 620-227-1822 or [email protected].
