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Q&A: The PPP Loan (Loan Application assistance from my office)

Q & A:

Question:

have you heard any details on if the PPP grant component of the loan is available if your employees are on unemployment now? And, can I decide when the loan starts? We talked about this but I fear applying for the loan and taking my employees off unemployment and paying them payroll but we don’t open for three months. In that scenario I would either have to have them go on unemployment again in two months time or paying them payroll from my finances?

Answer:

Yes, understood.

I discussed that concern in my posts earlier this week. Here’s my reply:

Yes, the PPP is available even if your employees are on unemployment, but yes you would have to take at least some of your employees off unemployment benefits.

Also, you could incur extra expenses by operating (if allowed to as an essential business) without the income to warrant it, and pulling employees off unemployment might also hurt them if they have to go back on it. They’d likely have a delay in benefits; a reduction could happen, but is unknown.

If we get the isolation order lifted, however, the funds would be useful toward re-building, and employees would be fully engaged once the order is lifted.

You might be able to delay – which is prudent to attempt to get some of the 8 week payroll period moved into a period of full operations -- but the dilemma is that these funds are limited. Also, you may not be able to fully anticipate when your business might be allowed to re-open.

In the case of an essential business, at least one has the possibility of re-opening prior to the isolation order being lifted, if the need is there and proper precautions taken.

In either case, my suggestion is to apply, then when the funds become available determine if you want to and can delay the funding, or reject it altogether and not take the loan.

If you do take the loan, and you don't use it – under current rules, you can simply return it, or use the cash over the 2 year payback period (at 4% interest) to assist with the re-build of the business. The Feds are currently saying there would be a forbearance on interest for 6 months anyway. You really cannot get hurt by applying, so that is my suggestion.

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