Many of our clients operate their own businesses, and as of today we have received and continue receiving numerous inquiries in connection with CARES Act (Coronavirus Aid, Relief, and Economic Security Act) enacted to provide economic relief to individuals and businesses facing economic hardship during current unprecedented challenging times.
While we monitor the developments, the situation is continuing to evolve. On April 3, 2020, eligible small businesses and sole proprietors were able to start submitting application to any existing Small Business Association authorized lender for an SBA 7(a) loan from the Paycheck Protection Program (“PPP Loan”). As of April 10, 2020, eligible independent contractors and self-employed individuals may also submit such application.
We encourage eligible businesses to apply through their banks/financial institutions that typically have designated staff to help out with SBA loan worksheet calculations. You may also need help from your accountants to submit supporting documentation.
Due to the large number of PPP Loan applications that are being submitted to SBA-authorized lenders, an interested eligible business should seek to submit its loan application as soon as possible in light of the fact that the SBA has released statement that “there is a funding cap and lenders need time to process your loan.”
As many of our clients make significant payments to independent contractors as part of normal business operations, one of the most frequently asked questions is whether for purposes of calculating “payroll costs” should a business include compensation paid to independent contractors? The position is that PPP Application enables independent contractors to apply for their own PPP loans. As a result, without further guidance from the SBA to the contrary, applying businesses should not include compensation paid to independent contractors in their calculation of payroll costs, as such independent contractors are able to seek their own relief directly from the PPP.
Note that SBA Form 2483 dated 04/20 is the current version of the PPP Application.