Posted on March 30, 2020 at 3:53 pm by Carol Tannenhauser
By Carol and Robert Tannenhauser
The federal authorities has launched a mortgage program designed to assist small companies and their workers via this era of closings and layoffs.
Small companies don’t simply imply mom-and-pop outlets and eating places: additionally they embody nonprofits, the self employed, skilled places of work, and others, so long as they’ve fewer than 500 workers and have been in enterprise as of February 15, 2020. Workers embody impartial contractors. The aim of this system is to carry the burden of payroll prices from employers throughout this fallow interval, and to make sure that worker salaries and advantages proceed to be paid.
Robert Tannenhauser, guide to ConnectOne Financial institution and a long-time Small Enterprise Administration (SBA) lender (and full-disclosure, the author’s husband with whom she is sequestered), defined what is named the Paycheck Safety Program to WSR (the one face-to-face interview in a month.) This system is included within the $2 trillion CARES (Coronavirus Help, Reduction, and Financial Safety) Act that President Trump signed into legislation on March 27th.
WSR: Why did they embody the Payroll Safety Program and the way does it work?
RT: It’s fairly easy; they made it that method as a result of they need to get the cash out quick. Mainly, the aim is for companies and eligible nonprofits to retain their workers on payroll for at the least the following two-and-a-half months — and, hopefully, to have the ability to return to regular operations as soon as the disaster is previous. This system is structured in order that taking part banks can provide SBA-guaranteed loans to eligible companies and nonprofits. The wonderful half is that the loans could be forgiven, mainly, when you don’t hearth anybody.
WSR: How a lot cash can companies get?
RT: The quantity is the same as 2.5 occasions your common month-to-month payroll prices for the previous 12 months, to not exceed $10 million. You may solely depend as much as $100,000 of an worker’s wage for this function. Payroll prices embody salaries, commissions, funds for parental, household, medical or sick depart, well being care and retirement advantages, and a few others.
WSR: How does somebody apply?
RT: You may apply on to your financial institution if they’re a taking part SBA lender.
WSR: How is the mortgage forgiven?
RT: The borrower submits an authorized utility for forgiveness to the lender, documenting the variety of workers on payroll and their pay charges for the eight-week interval starting on the date of the mortgage. If there is no such thing as a discount on the variety of workers, the complete quantity is forgiven. If there’s a discount, the quantity forgiven is proportionately decreased.
WSR: You already know what they are saying if one thing sounds to good to be true?
RT: On this case, it’s true. Identical to the federal government is sending checks on to people, they’re instantly serving to firms retain and pay their workers and preserve them off the unemployment rolls. Due to this fact, the enterprise has a greater likelihood of surviving.