If the borrower uses at least 60 percent of the money to cover payroll expenses, the loan will be fully forgiven. The borrower must also agree not to use more than 40 percent of the money for things like rent and utilities. Data released in late July 2020 shows the government has issued $521 billion in loans so far. That covers an estimated 84 percent of employees who work at small businesses.

Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities. All I can tell you is to apply now to everything you are eligible for and could use before more banks close off applications or funding is exhausted. That’s a rather scary proposition given CARES Act – Step-by-Step Guide for Small Businesses the already-difficult place we find ourselves in. But after countless hours studying this, that is the personal conclusion I have drawn. There are a lot of complex nuances and details in the Act, so what follows is an oversimplification. Be sure to talk to your CPA when it’s time to file taxes and claim your credits or if deciding to reduce your federal employment tax deposits.

Applying for CARES Act PPP Small Business Loan: Step by Step Guide

If the message contains only commercial content, its primary purpose is commercial, and it must comply with the requirements of CAN-SPAM. If it contains only transactional or relationship content, its primary purpose is transactional or relationship. In that case, it may not contain false or misleading routing information, but is otherwise exempt from most provisions of the CAN-SPAM Act.

Yes, but if you receive funds through the PPP, the $10,000 emergency grant will be subtracted from the potential forgiveness amount on that loan. You’ll have the option to consolidate the two loans by refinancing the EIDL into the Paycheck Protection loan—but that $10,000 grant will, sadly, still remain in the unforgiven funds category. And don’t forget, unforgiven funds come with interest attached to them.

Step 5: Submit Application and Required Documentation to Your Bank

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team. If you’re using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR for 15 months, an insane cash back rate of up to 5%, and all somehow for no annual fee. To help small businesses, lawmakers in Washington recently passed the Coronavirus Aid, Relief, and Economic Security Act, known in short as the CARES Act.

In 2021, the employee limit for determining qualifying wages is based on 500 employees instead of 100 employees. You can claim the credit for the first $10,000 of wages per employee, including payment for specific health benefits. However, you can’t double dip and use the same wages for the Employee Retention Credit and any other credits for employee wages (like the Family and Medical Leave Act). Additionally, you can’t claim this credit for employee wages if you paid for the wages using PPP loan proceeds.

Step Three: Download the application form and prepare to provide information about payroll costs

You can borrow 250% of your average monthly payroll, up to $10 million. This includes wages for full- and part-time employees, as https://www.bookstime.com/articles/accounting well as contractors. Any individual salaries over $100,000 are excluded, but you don’t leave out that payroll expense altogether.

On April 24, Congress passed legislation to replenish funds for small business loan programs. You don’t have to give a personal guarantee for loans under $200,000. You also can request an advance of up to $10,000 to get paid out in three days.

Remaining portions of the EIDL, for purposes other than those laid out in loan forgiveness terms for a PPP loan, would remain a loan. First you will need to apply for an Economic Injury Disaster Loan (EIDL) and then right after, you must request for the advance, maximum amount of $10,000. However, if you keep all of your employees, 100% of the loan will be forgiven.

This legislation put in place two programs to help small businesses get the financing they need. Funded by $350 billion in government-backed loans, the Paycheck Protection Program (PPP) is intended to help companies maintain their payrolls through June 2020. Dave Ramsey breaks down why the PPP loan is actually a bad idea for business owners. Getting a business loan can be a challenge, but it’s worth it if it means you can achieve your business goals. By following the steps above, you can increase your chances of getting approved for a loan and getting the financing you need to grow your business.

A Comprehensive Small Business Guide to CARES Act COVID-19 Relief

Businesses that received money under the PPP can also apply for a New Loan Facility. • To ease your fears about keeping up with payments on your current or potential SBA loan? CO— is working to bring you the best resources and information to help you navigate this challenging time. The CARES Act makes select changes to taxes and tax policies in order to ease the burden on businesses impacted by COVID-19. Practical and real-world advice on how to run your business — from managing employees to keeping the books.

• One important factor is that information about the customer’s account is at the beginning of the message and the brief commercial portion of the message is at the end.
• There is an enormous amount of information to process about the CARES Act and what programs you may be eligible for.
• Businesses that received money under the PPP can also apply for a New Loan Facility.
• Additionally, you can’t claim this credit for employee wages if you paid for the wages using PPP loan proceeds.
• You can claim the credit for the first $10,000 of wages per employee, including payment for specific health benefits.
• Data released in late July 2020 shows the government has issued $521 billion in loans so far.
• The Paycheck Protection Program authorized by the CARES Act makes loans of up to $10 million available to certain qualified small businesses.