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Help for Business Owners: The Paycheck Protection Program (Part 1)
Frank Malara • May 1, 2020

Please note: This information is valid and up to date as of April 29, 2020.

While the first round of funding for the Paycheck Protection Program was fully allocated in its first week, Congress approved an additional $310 billion in funding for the program on April 27, 2020. Congress also closed several loopholes in the process during the second round of funding.

Please continue to check back as changes and updates are made to the federal program.   

The COVID-19 crisis is having a profound impact on our economy, and especially small businesses.

It is particularly tough for businesses like restaurants and bars, construction and contracting, small retailers, and others in the service industry. The financial repercussions will be felt long after New York State is no longer on PAUSE.

Business owners need to act now to stave off Chapter 11 Bankruptcy. 

  1. Apply for the Paycheck Protection Program. This is a fully or partially forgivable loan that will allow you to maintain your payroll.
      
  2. Apply for an Economic Injury Disaster Loan (EIDL). This low-interest federal loan allows businesses to maintain a reasonable working capital to meet current financial obligations that you could have met prior to the economic disaster. Read our post about the EIDL here.
  3. Innovate and evolve. Can your brick and mortar shop accept and fulfill online orders? Can your salon offer paid consultations via video conferencing? Can your architecture or design firm provide clients with digital renderings or a virtual reality experience to allow them to continue moving forward with project planning?
  4. Contact us. If your business cannot weather this economic storm, it is to your benefit to retain legal counsel to guide you through the Chapter 11 process so that you can structure your bankruptcy in a way that allows you to remain open for business.
        

The Paycheck Protection Program (PPP) helps you keep paying your employees.

The federal Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020. It included several measures designed to help small businesses, notably the Paycheck Protection Program (PPP). The initial PPP fund was seeded with $350 billion and Congress recently allocated another $310 billion.  

The PPP is a federally guaranteed small business (fewer than 500 employees, or meets other federal requirements) loan to be used to maintain your payroll or business mortgage, rent, and utility payments. Your business must be in operation prior to February 15, 2020.  

The loan can be for up to 2.5 times your average monthly payroll costs, not to exceed $10 million (calculate your eligible payroll costs here ). There are no fees charged by the government or the lender, and no collateral or personal guarantees are required. The loan has a maturity of 2 years and an interest rate of 0.5 percent.  

The loan may be forgiven in its entirety if you maintain your payroll during the crisis or promptly restore payroll afterward. The forgiveness may be reduced if there is more than a 25 percent decrease in payroll. 

  1. Verify your eligibility online, go to the US Small Business Administration .
  2. Download and complete the 2-page application at the US Department of Treasury .
  3. Submit the completed application to any SBA 7(a) lender or through any participating federally insured depository institution, federally insured credit union, or Farm Credit System institution .

Note: Approach the financial institutions you already conduct business with to see if they are participating in the program.

Lenders may require you to be a customer, even if you open an account for the express purpose of applying for the PPP.

Some smaller banks, credit unions, and other businesses like payroll processors and Paypal are also participating in PPP lending.

We are here for you. 

Call (914-946-2889) or email us at Francis J. Malara or Anne Penachio with any questions or for a free consultation.

Additional Resources

If you still need to lay off or furlough employees, check out our unemployment post .

Get more information about unemployment benefits from the New York Department of Labor .

Do you have employees taking Families First leave? Read our Families First post and review the Department of Labor’s Families First Q&A here.

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