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Coronavirus related closures have and will continue to affect Phoenix small businesses and sole proprietorships. With paycheck protection loans, businesses can receive a loan to help them stay open during this time. Keep reading to learn more about how to apply.
Phoenix small businesses and proprietorships can begin applying for the PPP loan starting Friday, April 3, 2020. Independent contractors (“gig” employees), and self-employed individuals can start applying on Friday, April 10, 2020. You can access the application here. To be considered, your business must have 500 or fewer employees. Collateral is not required to apply for the loan.
You can receive this loan through banks that are designated 7A SBA lenders. You must have a business checking account with that bank in order to receive funding. If you already have an open business checking account with a bank that cannot process these loans, you can still contact another bank to go through this process. At the time of this posting (4-1-20), banks are still waiting on correspondence from the Treasury on how to process such loans.
To learn what is required on the application, check out a previous post about SBA Disaster loans. Certain businesses will automatically qualify to be considered for the loan, like restaurants, but most businesses will have to show proof of hardship.
Follow this simple equation to calculate how much your loan could be:
The average amount of your last 12 months of payroll multiplied by 2.5.
To put it simply, if your average payroll for the last 12 months was $10,000, your loan will be $25,000.
If you follow specific guidelines provided in the CARES Act and detailed here, your loan can be forgiven. To ensure that your loan can be forgiven, make sure you follow these precautions during the time period that lenders are considering:
Please note that only the principal is forgiven. You will still need to pay the interest that was accrued. However, you do not need to report the forgiven income.
If you do take a PPP loan, you cannot take a 50% tax credit later on. Loan payments will be deferred for six months. More information will continuously be released about the payroll protection loans within the next 30 days; stay tuned for helpful updates.
If you have previously applied for a Small Business Association Loan, you can reapply now. It is important that you apply as soon as possible. Funding for this program has a limit and will likely be in high demand.
This information is subject to change at any point, however, we are updating our website as often as possible with the most up to date information. Please contact your employment law attorney, banker, CPA, or tax advisor for more information and guidance.