Your question: How does the Paycheck Protection Program work for employees?

The purpose of the Paycheck Protection Program is to help you retain your employees, at their current base pay. If you keep all of your employees, the entirety of the loan will be forgiven. If you still lay off employees, the forgiveness will be reduced by the percent decrease in the number of employees.

What does the Paycheck Protection Program mean for employees?

The Paycheck Protection Program is a loan program that originated from the Coronavirus Aid, Relief, and Economic Security (CARES) Act. This was originally a $350-billion program intended to provide American small businesses with eight weeks of cash-flow assistance through 100 percent federally guaranteed loans.

How does the PPP program work for employees?

How the loan works. … From the date of origination of the loan, your employer has eight weeks to spend the funds if they want the loan to be forgiven by the federal government, and 75% of the loan amount must be spent on payroll — a.k.a., paying you, the employee.

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How long do you have to keep employees on payroll for PPP?

You must maintain the number of employees on your payroll.

The 8-week to 24-week period following your initial loan disbursement, (A) February 15, 2019 to June 30, 2019, (B1)

Do you have to pay back paycheck protection program?

At least 60% of your PPP loan must be used for payroll costs and the remainder must only be used for qualifying non-payroll costs. … If you do not apply for forgiveness and use the loan for these purposes you will have to pay back the loan.

Who qualifies for the paycheck protection program?

Small businesses with 500 or fewer employees—including nonprofits, veterans organizations, tribal concerns, self-employed individuals, sole proprietorships, and independent contractors— are eligible. Businesses with more than 500 employees are eligible in certain industries.

Can I pay my employees more with the PPP loan?

Can I use all the PPP funds to pay myself? No, and this applies to all small businesses. Keeping your employees laid off and increasing your own pay goes against the purpose of the program. Your forgivable amount would be reduced because your headcount was lower than before.

What payroll costs are eligible for PPP forgiveness?

Payments made by a borrower to furloughed employees of salary, wages, or commissions during the covered period are eligible for forgiveness as long as they do not exceed an annual salary of $100,000, as prorated for the period during which the payments are made or the obligation to make the payments is incurred.

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Can I find out if my employer get a PPP loan?

Q: How can I find out if my employer has applied for or received a PPP loan? In most cases, employers will notify their workers if they receive PPP funds because they will need to call them back to work so they can have the loan forgiven.

Do employees have to work for PPP loan?

Applying for PPP Loans

The first requirement to apply for a PPP loan is that your business must have been in operation on February 15, 2020 and had employees for whom you paid salaries and payroll taxes. If you are self employed and don’t have any employees, you will also qualify to apply.

Do employees have to be full time for PPP?

When you applied for your PPP loan, you included all employees you employed—full-time and part-time workers—in the calculation. But for loan forgiveness, the CARES Act looks at your average full-time equivalent (FTE) employees during the covered period.