COVID-19 Emergency Loan Relief and Federal Student Aid

The COVID-19 disease is having a major effect on American economy. Due to recent decisions taken by both the federal and state government, ASHA members who own small-scale businesses, private practices or are independent contractors could now be eligible for emergency loan assistance. The following information will be updated information as developments develop.

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Notice:The following information should not be construed as legal or financial advice.

Forgivable Loans and Emergency Grants for Small Businesses

Paycheck Protection Program

As part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, Congress established the Paycheck Protection Program (PPP).

This program offers eligible small businesses with loan interruptions, which can be repaid if the borrower’s ability to keep its employees on the payroll.

The PPP has received funding as well as program changes via legislation such as the CARES Act, the Paycheck Protection Program and Health Care Enhancement (PPPHCE) Act, as well as the Paycheck Protection Program Flexibility Act (PPPFA). In the Consolidated Appropriations Act, 2021 will provide additional funds for “First Draw” PPP loans for those who haven’t had an PPP loan in the past, and for Second Draw PPP credit for individuals who have already been granted the PPP loan.

Application for PPP are currently being accepted until May 31, 2021.

The advantages of this program are:

A loan that is flexible to cover operating costs. The program offers the ‘First Draw’ credit equivalent up to 10 weeks the company’s payroll up 10 million dollars. This can use to fund rent, wages and utility bills that allow small-sized businesses to remain open. A second draw loan between $2 and 2 million is offered to businesses who have used funds from a first draw loan.

Forgiveness of loans. Borrowers have up to 24 weeks to use money on payroll, rent mortgage payment, rent, and utilities. To qualify in the loan forgiveness program, loan borrowers have to spend at 60 percent of their loan on wages. The PPPFA provided two exceptions that allow borrowers to receive complete PPP loan forgiveness, even in the event that they do not fully restore their workforce.

  • If the applicant is unable to rehire previous or similar qualified employees in the event of a shortage
  • If the client cannot return to that same business due to the COVID-19 health emergency, the recipient is not able to resume business health emergency

Rewards to rehire. While reductions in staffing levels typically result in a decrease on loan forgiven, this program allows businesses that have lay off workers to rehire them , while getting complete loan forgiveness.

Eligibility is expanded. Participation in the program is available to all businesses as well as 501(c)(3) nonprofits with less than 500 employees, or who satisfy the Small Business Administration’s (SBA) small business requirements and also sole proprietors, independent contractors and self-employed people. PPP Second draw loans are available to applicants with less than 300 workers.

streamlining the application process. The program operates through financial institutions directly, and the government is able to waive many conditions normally associated with these loans to give small businesses with the relief they need as quickly as is possible. The applicants do not have to show any particular need for the loan, they simply have to provide an honest declaration of the loan’s need and the way it is intended to help keep employees.

Things to Know About the “Paycheck Protection Program”

Applying for the Program

Paycheck Protection Program Paycheck Protection Program operates via the Small Business Administration’s current 7(a) loan program, through which the SBA provides guarantees on loans provided from participating banks. Candidates are able to apply for an 7(a) garantie directly via a financial institution that is a participant and, if they are approved and accepted, will get an SBA guarantee for their loan. The deadline for applying is May 31st 2021.

In this plan, lenders who have been approved are given direct power to approve application for loans and forgiveness in the event that the borrower was operation on the 15th of February, in 2020 and had paid employees or contractors.

Applications are accepted via the SBA’s simple Coronavirus Relief Options webpage. This website provides information about how to apply for the PPP and other programs, including those offered by the EIDL Loan Advance, SBA Express Bridge Loans and SBA Debt Relief. Borrowers must prove that the current health crisis renders the loan essential to sustain their business, and that they intend to make use of the loan to keep the previous number of full-time equivalent employees per month. This certification of good faith is opposed to any specific indication of need that could have hindered the process of applying.

Required Documents

The borrower must provide documentation, such as the numbers on their payroll to prove their eligibility to take part in the program. In addition, the law obliges sole proprietors and contractors to prove their eligibility using pay tax filings such as Form 1099-MISC and evidence of income and expenditure.

Business Eligibility

The Paycheck Protection Program is open to all businesses, 501(c)(3) nonprofits, and veterans’ associations that employ less than 500 employees or who meet one of the SBA’s specific small business thresholds for industries. Solo proprietors, independent contractors as well as other self-employed people are qualified. The’second draw’ loans are offered to small businesses that have 300 or fewer employees that are able to demonstrate that they have lost minimum 25% of their gross revenue in any quarter of 2020 as compared to that similar quarter in 2019.

Covered Expenses

SBA can offer an unconditional guarantee on loans that amount to the amount of the applicant’s monthly average cost of payroll over the last year, multiplied by 2.5. This means that the loan amounts to two and one-half months of payroll expenses. Maximum loan amount is $10 million for loans with a ‘first draw’ and $2 million for’second draw loans.

To determine the loan amount and forgiveness (see below) Payroll is defined as comprising: (1) salary, commission, wage or other similar compensation (2) tips in cash or equivalent (3) payments for parental, vacation medical, family or sickness leave (4) the payment for separation or dismissal; (5) pension or health benefits (6) the state- and city-based payroll tax and (7) payment to sole entrepreneurs and independent contractors which include a salary, commission or other net earnings earned from self-employment. The calculation of the cost of payroll does not include compensation for employees that exceeds $100,000 annually on an annual basis including federal payroll taxes, the payment of compensation to employees living outside of the United States, and leave where the employer receives an income tax credit under the “Phase II” coronavirus response.

Although the loan amount is calculated based on the cost of payroll however, the loan can be used to pay for a variety of business-related expenses, including rent, payroll and mortgage interest, as well as credit card interest, and utilities.

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