PPP, Unemployment, SBA Loans

PPP, Unemployment, SBA Loans

The Payroll Protection Plan, which the government is ostensibly offering to

businesses in operation since before Feb. 15, offers loans of two-and-a-half times that business’ average monthly payroll cost, though it does contain some restrictions, such as a $100,000 salary cap per employee. If businesses use PPP funds to cover payroll, including paid sick leave, health insurance and retirement plan contributions, the government will forgive that portion of the loan, essentially turning it into a grant.

People who have been laid off or sent home without pay, and workers who have contracted COVID-19 or are caring for someone with the disease can apply for unemployment through the Mississippi Department of Employee Security.

Mississippi small-business owners can also apply for the low-interest disaster assistance loan, called the Economic Injury Disaster Loan, or EIDL, from now until Dec. 21, 2020.

Specifically for COVID-19 response, a $10,000 emergency advance is also available to businesses that apply for the loan. Businesses are not required to pay back the $10,000 advance, which functions like a grant, regardless of whether or not they qualify for the loan, Jackson attorney David Humphreys confirmed April 3. (If you receive both an EIDL advance and PPP loan, some of that overall number may not be fully forgiven, Humphreys said.)

Business owners should assess the impact of the novel coronavirus on their operations from Jan. 31, the date the virus entered the U.S., and compare it with their prior years of operation. Applicants must prove that they have experienced a loss in their revenue or production because of the COVID-19 pandemic, and they must have fewer than 500 employees.

Applicants can benefit from up to $2 million each in loans for damages due to COVID-19. Interest rates vary, from 3.75% for small businesses to 2.75% for “most private nonprofit organizations,” Lampton said.

The funds can pay debts, payroll, accounts payable and other general expenses, Lampton said.

Businesses registered in the State of Mississippi and have filed tax returns with the Internal Revenue Service—a schedule C for sole proprietorships or a corporate tax return for corporations—are eligible.

During a March 20 teleconference call, Michael Lampton of the SBA explained that while the SBA takes into account a business’ credit history in determining whether or not to approve the loan, people should apply regardless of their credit.

Businesses can extend repayment for up to 30 years and defer payments for up to one year, he said. Applications are available at www.sba.gov/disaster. Applicants can also call 1-800-659-2955 to request a paper application and to ask questions related to the loan.