Joel Newman, Senior Small Business Specialist, Tennessee Small Business Development Center – Jackson, visited with NEWS/TALK 101.5 FM & WNWS.COM for a Question & Answer Session concerning various items including the Paycheck Protection Program, economic disaster and loan forgiveness.
Question: There is a lot of news about the Paycheck Protection Program. What is the most important component to this program, and are there additional components?
Answer: There are several different programs. Actually there are 5 components to the program. The public does not understand the enormity of this program. It was passed by Congress without having a process in place and it has changed constantly.
Question: Would you name and discuss each of the five components?
Answer: 1 – If you have an existing SBA Loan (prior to March 1) – The Principal and Interest will be paid by the SBA for 6 months.
2 – Paycheck Protection Plan – funds for payroll for a period of 8 weeks (if 75% of loan used for payroll, loan is forgiven, if not it is prorated and you payback difference with 1% interest.)
3 – Economic Injury Disaster Loan – Application responses determines amount to be lent at 3.75% up to $2 million and up to 30 years.
You cannot request an amount, it is determined by the SBA and you have right to accept or reject. Non-Profits interest is 2.75%.
4 – As part of the EIDL you can request $10,000 in emergency relief which will be determined by the SBA.
5 – Direct payments to individuals and families by the Treasury Department.
For numbers 1 through 4 (above) there are pages and pages of information which have changed many times.
Banks have had difficulty navigating the system as have other associated lenders.
Some banks require additional information than what is on the applications.
Question: Who is eligible?
Answer: Any business with less than 500 employees.
Question: What is the most common misconception about this plan?
Answer: That applications for all the programs are going to happen fast – it requires patience.
Question: Will you tell us about how the loan is forgiven?
Answer: If you use 75% of PPP Loan for payroll, the loan is forgiven. The amount is the average monthly payroll times 2.5.
Question: How do laid-off employees figure into this equation?
Answer: (Employers) can rehire and forgiveness will be reduced based on numbers and salary level.
Question: How does this apply to someone who is self-employed?
Answer: If someone is not taking a monthly draw, add the total taken at the end of the year (Schedule C) and divide by 12.
For more information, call Joel between 8:30 a.m. and 4 p.m., at (731) 499-0495.
(PHOTO: Joel Newman, Senior Small Business Specialist, Tennessee Small Business Development Center – Jackson)
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