Knowledge and Insights
Are you a business owner or nonprofit organization looking to tap into the new Paycheck Protection Program (PPP) and other loan assistance programs? The Mercadien team has been tracking numerous relief program developments and stands ready to help our clients move quickly to take advantage of these potentially forgivable relief loans, as well as evaluate which loan or grant is right for them.
How can Mercadien help?
Your Mercadien advisor can help you explore the options and assess which program is best for your organization, prepare loan application calculations, compile the necessary documentation, complete and submit the application and answer your questions about the PPP and other loans. Mercadien is also available to assist you in evaluating your budget and cash flow needs, working as an advisor and sounding board to help you manage your way through the upcoming months. Complete the COVID-19 Assistance Request form on our website or contact your engagement partner to get started.
What do I need to know?
Paycheck Protection Program
On April 2, 2020, the U.S. Treasury issued more guidance on PPP and its loan terms:
- PPP loans will be forgiven only if loan proceeds are used to cover eligible payroll costs, and most mortgage interest, rent and utility costs over the 8-week period after the loan is made and employee and compensation levels are maintained.
- Interest rate is set at 1% and the loan term is two years for all borrowers.
- There is a six-month deferral on loan payments (interest still accrues during this period).
- No collateral or personal guarantees are required.
Economic Injury Disaster Loans
The Economic Injury Disaster Loan Program (EIDL) can provide up to $2 million of financial assistance (actual loan amounts are based on amount of economic injury) to small businesses or private, non-profit organizations that suffer substantial economic injury as a result of the declared disaster, regardless of whether the applicant sustained physical damage.
An EIDL can help you meet necessary financial obligations that your business or private, non-profit organization could have met had the disaster not occurred. It provides relief from economic injury caused directly by the disaster and permits you to maintain a reasonable working capital position during the period affected by the disaster. EIDLs do not replace lost sales or revenue.
What should I be doing now?
The PPP application period for small businesses and sole proprietorships opened Friday, April 3. Independent contractors and self-employed individuals can apply starting Friday, April 10.
DISCLAIMER: This advisory resource is for general information purposes only. It does not constitute business or tax advice, and may not be used and relied upon as a substitute for business or tax advice regarding a specific issue or problem. Advice should be obtained from a qualified accountant, tax practitioner or attorney licensed to practice in the jurisdiction where that advice is sought.