What is the Paycheck Protection Program?


         On March 27, the Coronavirus Aid, Relief and Economic Security (CARES) Act was passed and signed into law. It is the largest financial support package in United States history and has over 800 pages detailing the relief that will be provided to Taxpayers and businesses. One area that is gaining interest is the Paycheck Protection Program (PPP).
          The goal of the PPP is to help businesses provide economic stability for their employees. This is done through federally backed loans, in partnership with the Small Business Administration (SBA), that are to be used for certain payroll expenses. This would include salary (for those who make less than $100,000/year), payment of state and local taxes on the salary, cost of vacation, medical, family, and sick leave, and the cost of health care benefits. It can also be used to pay rent and utilities. This loan is intended to cover costs from February 15 to June 30 and will be 2.5 times the amount of normal payroll costs.
          A key point about this program is that the SBA will forgive these loans if they are used for their intended purpose, used during the 8 week period, and if businesses keep their employees at the same salary. If the money is used for anything else, the loan must be repaid. The CARES Act is very detailed and we’ll share more insights in future posts.

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