COVID-19
NAACP Legal Defense and Educational Fund, Inc.
& small business
CARES Act: Paycheck Protection Program In response to the hardship small businesses are facing due to COVID-19, lawmakers have created a loan program to provide financial assistance during the global pandemic. Read more about how you can qualify for this important program.
Gett y/Mark Romanelli
The CARES Act has created a temporary new business loan program called the Paycheck Protection Program (“PPP”) to assist small businesses — those with 500 or fewer employees — in the wake of the COVID-19 pandemic. Qualifying businesses are those that were in operation on February 15, 2020 with paid employees or paid independent contractors.
350
billion
The PPP provides nearly $350,000,000,000 in federal loans. A single business can qualify for a loan of up to $10 million to support its ongoing operations.
How much the PPP provides in loans
30
The deadline for applications is Tuesday, June 30, 2020.
th
June 30th: Deadline to apply for the loan
To apply, fill out SBA Form 2843. Loans will be administered on a first come, first served basis. The link to the application is available here.
The Formula Here’s the formula used to calculate your requested loan amount:
1 Step 1: Determine total payroll costs from the last twelve months for employees whose principal place of residence is the United States.
Step 2: Subtract any compensation paid to an employee in excess of an annual salary of $100,000 and/or any amounts paid to an independent contractor or sole proprietor in excess of $100,000 per year.
2
3 Step 3: Calculate average monthly payroll costs (divide the amount from Step 2 by 12).
Step 4: Multiply the average monthly payroll costs from Step 3 by 2.5.
4
Terms & Eligibility
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see if your business qualifies
Note that payroll costs consist of compensation to U.S.-based employees in the form of salary, wages, commissions, or similar compensation. Similar compensation consists of cash tips or the equivalent (based on employer records of past tips or, in the absence of such records, a reasonable, goodfaith employer estimate of such tips); payment for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal; payment for the provision of employee benefits consisting of group health care coverage, including insurance premiums, and retirement; payment of state and local taxes assessed on compensation of employees; and, for an independent contractor or sole proprietor, wage, commissions, income, or net earnings from self-employment or similar compensation. Also, if the business already has an outstanding federal loan, it may affect the calculation of the requested loan amount. The total amount of the loan cannot exceed $10 million or the payroll calculation, whichever is lesser. Finally, there are exceptions to the 500 employee cap, depending on the industry of the business.
You will not have to make any payments for six months following the date of disbursement of the loan. However, interest will continue to accrue on PPP loans during this six-month deferment. Loan payments may be deferred for up to one year and may be forgiven in whole or in part, including interest, if the loan is used for the following purposes and employee and compensation levels are maintained. 75% PPP loan proceeds must be used for payroll costs. The remaining 25% can be used for: costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums; mortgage interest payments (but not mortgage prepayments or principal payments); rent payments;
other payroll
utility payments; interest payments on any other debt obligations that were incurred before Feb. 15, 2020; and/or
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refinancing an SBA EIDL loan made between January 31, 2020 and April 3, 2020, if you received an SBA EIDL loan from January 31, 2020.
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COVID-19
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small business
NAACP Legal Defense and Educational Fund, Inc.
The NAACP Legal Defense and Educational Fund, Inc. is America’s premier legal organization fighting for racial justice. Through litigation, advocacy, and public education, LDF seeks structural changes to expand democracy, eliminate disparities, and achieve racial justice in a society that fulfills the promise of equality for all Americans. LDF also defends the gains and protections won over the past 80 years of civil rights struggle and works to improve the quality and diversity of judicial and executive appointments.