ST. PETERSBURG, Fla. — If you're a small business owner here in the Tampa Bay area, you may be feeling a lot of anxiety when it comes to paying your employees during COVID-19 coronavirus.
The federal government recently put the Paycheck Protection Program (PPP) in place and set aside about $350 billion for small business owners to keep their employees on their payroll and help businesses continue to operate. According to the Small Business Administration (SBA), millions of Americans can qualify for this loan, which could be as much as $10 million per business.
This loan includes forgiveness of up to eight weeks of payroll based on how many employees you keep and their salaries, no SBA fees and at least six months of deferral with maximum deferrals of up to a year.
"You have to have been in business before February 15 of 2020 and actually have peril expenses. That can be payroll to employees, if you're a restaurant it can include servers and tips they receive and also if you made payments to independent contractors," says Tampa Bay attorney, Kalpesh Patel.
Patel specializes in Corporate law and works with small businesses. He was a Double Major in Business Administration and Business Management from University of Illinois. He has his Juris Doctorate from Florida Coastal School of Law and founded FL Patel Law.
10News asked him questions about this loan, including how much a small business can borrow and what you can use the money for.
How does it work?
The PPP can give a small business a loan up to $10 million to cover payroll and certain other expenses, such as health care benefits, mortgage interest payments, rent and utilities.
If you keep all of your employees on payroll for eight weeks, the SBA says they will forgive the portion of the loan used for payroll, rent, mortgage interest, or utilities. If 100 percent of the loan is used for these expenses, the entire loan is forgivable.
Does my business qualify?
The SBA says businesses with 500 or fewer employees are considered a small business.
Small businesses that qualify under the Small Business Act include the following:
- Eligible non-profits
- Veterans organizations
- Tribal concerns
- Sole proprietorships
- Self-employed people
- Independent contractors
If your small business employs more than 500 people but is part of an industry that allows for more employees, you're still eligible.
How much money can I get?
While you can get up to $10 million from the government, it doesn't mean you necessarily will.
According to the Small Business Owner's Guide to the CARES Act, your loan amount is determined by several factors.
For example, if you were in business from Feb. 15 through June 30 in 2019, your maximum loan amount is equal to 250 percent of your average monthly payroll costs during that time period.
If you aren't in business between the above dates, your maximum loan amount is also equal to 250 percent of your average monthly payroll costs, but are applied to costs between Jan. 1 through Feb. 29, 2020.
You can refinance an Economic Injury Disaster Loan (EIDL) that you took out during Feb. 15 through June 30 of 2020 into a PPP loan by adding the outstanding loan amount to the payroll sum.
I've gotten my PPP loan. Now what?
If you want to get forgiveness for your PPP loan, you'll need to apply for it through your lender. You'll need to provide the following in your application:
- Documentation verifying the number of employees on payroll and pay rates, including IRS payroll tax filings and State income, payroll and unemployment insurance filings.
- Documentation verifying payments on covered mortgage obligations, lease obligations, and utilities.
- Certification from a representative of your business or organization that is authorized to certify that the documentation provided is true and that the amount that is being forgiven was used in accordance with the program’s guidelines for use.
For any funds that aren't forgiven, you'll need to pay it back within 10 years and with an interest rate of up to 4 percent. You can defer all payments from six months up to a year after you received the loan.
Can I get other loans in addition to a PPP loan?
The owner's guide also includes information on how you can apply for a Small Business Debt Relief Program loan and Economic Injury Disaster Loan & Emergency Economic Injury Grant. The guide says you can receive funds from those other programs, so long as they don't pay for the same things.
For more information, see below or click here:
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