The CARES Act: Everything You Need to Know About the Payment Protection Program

The novel coronavirus, COVID-19 has swept through the world, resulting in over 7 million infections and 409 197 deaths. The USA has the highest infection and fatality number in the world, with more than 2 million infections and 113 061 deaths. 

The biggest challenge with this virus was, and is still, that no one knows much about its effect on people who contract the virus. What is well-known is that the virus is highly contagious, and it spreads rapidly via person-to-person transmission. Therefore, most of the world’s population has spent a sizeable portion of this year hunkering down at home to stop the virus’s spread. 

Therefore, not only has this virus had a major impact on the world’s national healthcare systems, but it has also single-handedly shut the global economy. Countries like the US have implemented economic stimulus bills such as the Coronavirus Aid, Relief, and Economic Security (CARES) act to support financially businesses, both large and small, self-employed individuals, and freelancers.

The Paycheck Protection Program

One of the elements of the CARES act is the Paycheck Protection Program (PPP). It is a loan offered by the Small Business Administration that is “designed to provide a direct incentive for small businesses to keep their workers on the payroll.”

As with all laws and acts passed by the US state and federal governments, there are terms and conditions attached to the provision of funds through the Paycheck Protection Program. Therefore, to ensure that your business fulfils these requirements, it is best to consult with an Atlanta small business payroll service provider who will guide you through the process of meeting the PPP application deadlines, the submission of supporting documents, as well as how the loan money is to be spent. 

Additionally, there are several facts that are worth noting: 

PPP Eligibility 

Only companies that employ less than 500 employees are eligible for the PPP loan. Secondly, you need to prove that your business has directly been impacted by the current economic uncertainty caused by the COVID-19 pandemic and resultant shutdown. 

Additionally, self-employed consultants, gig workers, and freelancers are eligible to apply for this loan. 

Application deadline 

The deadline to apply for this loan is 30 June 2020. Therefore, if you need financial assistance to get you and your business through the economic downturn caused by the shutdown, it is essential to submit your application well before the deadline date. 

The total loan amount can be forgiven

The SBA will forgive the total loan amount if all employees are kept on the company’s payroll for eight weeks. And, 75% of the total loan must be used to cover the cost of the payroll. The remaining 25% must be used to pay rent, utilities, and monthly mortgage interest. 

Final thoughts 

The PPP is just one aspect of the CARES act that bears relevance to small businesses and self-employed individuals during the pandemic. Other parts of the act that are worth mentioning include the Economic Injury Disaster Loans and the Pandemic Unemployment Insurance. 

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