April 2

COVID-19 Business Survival with the Paycheck Protection Program (PPP)

Help for small businesses navigating through the COVID-19 Pandemic

In normal times, being in an aviation related business can be fraught with challenges. In difficult times, as we are currently experiencing, those challenges can be insurmountable. However, due to the historic $2.2 trillion dollar stimulus package (Coronavirus Aid, Relief, and Economic Security Act/CARES), help for your essential aviation business is on the horizon.

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Small businesses are the fabric of our society and as such, the CARES act is providing $349 billion in Small Business Administration loans and grants to companies like yours. Do you qualify for a forgivable loan under the Paycheck Protection Program (PPP) to supplement business expenses including mortgage/lease payments, payroll and utilities? Chances are you do. Follow the steps outlined and you could be well on your way to saving your business from financial gloom, while providing secure employment to your team during these trying times.

How do I know if I qualify?

Small businesses with 500 or fewer employees—including nonprofits, veterans organizations, tribal concerns, self-employed individuals, sole proprietorships, and independent contractors are eligible.In order to qualify and obtain up to $10 million in a potentially forgivable loan, the following eligibility requirements must be met:

  • The business has 500 or fewer employees.
  • Your business needed to be in existence prior to February 15th of this year
  • The owner certifies that the uncertainty of economic conditions makes the loan necessary to continue operations during the pandemic.
  • The loan proceeds must be used to fund payroll, rent or mortgage payments, interest on debt, and utility payments.

If you qualify per the above conditions, you may be eligible for the Paycheck Protection Loan, as part of the CARES act.

The Paycheck Protection Program loan was created to ensure that businesses have the funding necessary to pay your employees, preventing layoffs and keeping your doors open. The best part? You are providing a source of secure income for your valued employees, while keeping your aviation related business viable during this crisis.

How much could an eligible small business borrow?

An eligible small businesses can borrow up to $10 million with the maximum loan amount based on the business’s average total monthly payroll costs for the prior 12 months, multiplied by 2.5.

What are the loan terms?

  • Terms are the same for everyone!
  • 1% Interest rate
  • Maturity of two year with the 1st payment deferred for six months after approval
  • 100% guarantee by the SBA
  • No collateral or personal guarantees from borrowers
  • No borrower or lender fees payable to the SBA

What can the money be used for?

If funds are used for qualified expenses, the small business may be eligible for loan forgiveness. Since the program is designed to help businesses keep employees on the payroll, the primary use of Paycheck Protection Program funds should be used to cover payroll-related expenses. Eligible expenses include:

  • Salaries, Wages, & Commissions
  • Expenses
  • Vacation, sick, parental/family/medical pay
  • Retirement contributions
  • Group health coverage premiums
  • State and local taxes
  • Utilities (electricity, gas, water)
  • Communication (phone or internet access)
  • Insurance premiums or other healthcare costs
  • Rent, provided borrowers signed their lease before February 15, 2020

How is the loan possibly forgiven? 

Loan forgiveness is determined by the bank that grants the loan. They will have 60 days to approve or deny a forgiveness request.

  • The loan must be used for qualified expenses.
  • Must pay 100% of payroll dollars to employees during the eight weeks after loan approval.
  • Amount of loan forgiveness will be reduced if the number of full-time workers is reduced over eight weeks, or payroll costs are reduced by 25% or more.

If some of the loan must be paid back due to at least 75% of the money not being used to cover payroll, the remaining balance must have a maturity date of 10 years or less and the interest rate must not exceed 4%. There are no prepayment penalties and the federal government will continue to guarantee the loan.

What do I need to apply?

In most cases, including applying for the Paycheck Protection Program, you will be asked to provide documentation as part of the application process. Having the following documents available ahead of time can reduce your processing time, shortening the length of time to obtain your loan:

  • Articles of incorporation
  • By-laws or operating agreement
  • Copies of owner’s driver’s license
  • Payroll expense verification
  • Certify that all employees live in the United States
  • List of employees who do not live in the U.S. and corresponding salaries
  • Profit and loss statement for previous 12 months
  • Proof of expenses like rent/mortgage payments, interest on debts, and utilities.

How do I apply?

Since the Paycheck Protection Loan program is administered by the Small Business Administration, loan applications can be submitted through any lender who is affiliated with the Small Business Administration. It is recommended that you complete the SBA’s Sample Application and submit the document to any SBA-approved lender. If you already have a banking relationship with an SBA lender, you might find this approach to be a good choice. If you do not have an existing relationship with a SBA bank, you can find a list of SBA Lenders here. Often times your accountant can help you pull the other necessary documentation together, upon request.

How long will it take?

The goal for the CARES act is to provide this assistance in a timely manner. While no commitment is currently being made regarding the turnaround time for the loan process, it has been understood that the time from application to distribution of the loan proceeds should take between 14-30 days for completion.

Where can I learn more about this?

The U.S. Department of the Treasury has a good collection of official information on the program here.

Next steps

This program is first come first serve and there will be many taking advantage of it. What are you waiting for? There is no better time than the present to proactively take the steps outlined to help your business survive during this pandemic. By applying and obtaining funding, you will not only be helping your business survive, but you will be directly and indirectly contributing to the well-being of your employees, providing them with job security as we all navigate through this COVID-19 crisis.

Disclaimer: Flight Schedule Pro and its affiliates and author do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisers before engaging in any transaction.


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