The US Small Business Association, with support from the Department of Treasury, has implemented the Paycheck Protection Program (“PPP”), authorizing up to $349 billion in forgivable loans to small businesses to pay their employees during the COVID-19 crisis.
The program provides small businesses with loan amounts up to 2.5 months of average payroll costs including benefits. Self-employed individuals and sole proprietors may include in payroll a proportionate (2 1/2 months) amount of annual income based on income in 2019. Loan funds may be used to pay actual payroll costs, interest on mortgages, rent, and utilities during the "Covered Period." The Covered Period begins on the date the loan is funded and continues for 24 weeks. In previous legislation the Covered Period was only 8 weeks.
Loans may be forgiven by the SBA in full or partially based on the employer using 60% of the loan funds to pay payroll expense during the Covered Period (previously this was 75%).
Source: VEDA 8.5.2020