COVID-19 – Paycheck Protection Program (PPP) & Stimulus Checks

This past week President Trump announced he wanted to open America back up in 3 phases. The complete outline of these phases can be found here.  This may be a positive indicator that we could be seeing America getting back to work sooner rather than later.

One of the main things taking up space right now in the fight to keep America working is the Paycheck Protection Program (PPP).  This program was put in place to help self- employed, contract workers and small businesses that have less than 500 employees. The PPP loan is capped at $10 million to help with 2 months worth of payroll expenses. Something unique about this relief loan is that it does not require a personal guarantee or collateral from borrowers. The deal is that the loan is repaid at a 1% interest rate over two years. The federal government will forgive the loans if the borrower uses 75% of the money for payroll for eight weeks. Any money left over can be used towards the mortgage, rent or utilities. The deadline to apply is June 30, 2020.

The Treasury has created this guide for the PPP and here is a list of the approved lenders. The SBA did put out a sample application but each bank will have its own application. Right now, the SBA is currently not accepting any more applications as the cap of $350 billion was reached this past Thursday. You can read more here.

What are the advantages of PPP and how can we make the most of it?

There are many benefits of the PPP but the biggest one to business owners is it will help with cash flow and keep people employed, which in turn, helps the government with fewer unemployment claims.  It is a win-win for small to medium-size businesses that may help us hasten our recovery from COVID-19.

Some things to consider when implementing PPP over unemployment  –

  • People may potentially get more on unemployment than with the PPP due to the 3 main changes that were made to unemployment.
  • There are some gray areas – For people on unemployment, when work is offered, can they refuse work and stay on unemployment?
  • It may not be a great fit for businesses that could have legal restrictions when they do open again like restaurants, bars, and gyms.
  • Businesses that have already let go of employees will not benefit fully from the PPP as the extended unemployment benefits and PUA (pandemic unemployment assistance) will provide employees funds instead.

Stimulus Checks

Maybe some on you received a gift of a stimulus check this past week in your checking account.  If you haven’t and you’re eligible, you can find out when you will receive it here.  Remember, you had to file your 2018 and 2019 taxes to see this money in your account. If you have your taxes direct deposited – that would be the method for receiving your stimulus check.

Here are some suggestions we have for how to spend it:

First, we are advising that everyone keep current on their bills if there is any way possible.  Second, this is a great time to pad your savings, it is never bad to be sitting on cash.  That being said, the stimulus intention was for you to use it for things that will stimulate the economy.  For example, the smaller things that you have put off, like getting your will and trust created or updated, this could be a great time and great use for the money.