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Small businesses and other eligible organizations/individuals still have an opportunity to obtain a potentially forgivable Paycheck Protection Program loan to help fund their payroll costs and certain non-payroll costs (i.e. mortgage interest, rent and utilities) during this time of economic uncertainty. While there is still $129 Billion of funds available in the Paycheck Protection Program, the program is set to end on June 30th and some lenders are setting deadlines as early as this week for accepting new loan applications to allow enough time to process the paperwork. Eligible loan recipients include the following:
•Businesses with under 500 employees or that meet the “alternative size standard” where maximum tangible net worth of the business does not exceed $15 million and the average net income after federal income taxes (excluding any carry-over losses) of the business for the two full fiscal years before the date of the application does not exceed $5 million. There is also a special exception for hotels and restaurants
•501(c)(3) tax-exempt nonprofit organizations
•501(c)(19) tax-exempt veterans organizations
•Tribal business concerns
•Sole proprietors/self-employed individuals
In general, eligible businesses can request a maximum loan amount of 2.5 times their monthly average payroll costs with a cap of $10 million and eligible self-employed individuals can request a maximum loan amount equal to 2.5 times their 2019 Schedule C monthly net profit with a cap of $20,833 (How to Calculate Maximum Loan Amounts – By Business Type). In addition, the recently enacted Paycheck Protection Program Flexibility Act of 2020 gives borrowers greater flexibility in how they can use the loan proceeds and provides favorable terms to help ensure loan forgiveness.
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As always, Lanigan, Ryan, Malcolm & Doyle will continue to monitor this evolving situation and add updates to our COVID-19 Resource Center as they become available. As an “essential” business in the state of Maryland, we will continue to work for clients to meet upcoming deadlines, while emphasizing the safety of both our clients and our team. Please know that your Lanigan, Ryan team members are always available for questions.