Paycheck Protection Program officially runs out of money
The Paycheck Protection Program (PPP), one of the most important elements of the $2.2 trillion CARES Act, is an initiative that makes loans available to small businesses, which may be forgivable if business owners keep their employees on the payroll. It’s effectively a lifeline in which the federal government will indirectly pay these workers’ salaries for a while. However, the Small Business Administration announced that on Thursday, April 16, it had officially run out of money.
Allocated funds to PPP were ultimately far from sufficient to meet demand. The program rolled through $349 billion in less than two weeks. Independent contractors and self-employed individuals ended up at a severe disadvantage with the application process, as they were unable to apply until April 10, a week after PPP opened to small businesses.
Both Democratic and Republican lawmakers agree that more money needs to be approved for the PPP, but they’re currently at an impasse over whether a new funding package should include money for the Economic Injury Disaster Loan program, as well as states and hospitals.
The fight over new funding for the small-business program is founded on a central disagreement between Democrats and Republicans over how expansive stimulus programs need to be.
Senate Republicans and the Trump administration have been pushing for another $250 billion in funding for the small business program to incentivize companies to retain employees and keep them on the payroll. But Democrats want to ensure that some of the money is prioritized for companies run by minorities and women that may not have existing relationships with banks. They are also calling for additional funding for hospitals as well as state and local governments.
Until Congress decides whether or not to allocate more money into the program, there are certain steps you can take to prepare for a second round of funding:
- Gather up your paperwork including your tax returns for 2019, including Schedule C, Forms 1099-MISC that detail compensation received and a book of record that establishes you’re self-employed and in operation on or around Feb. 15, 2020.
- Contact your bookkeeper or payroll provider for employees’ paperwork. This would include Forms 941 and 940, which show Social Security and Medicare taxes withheld and payments toward unemployment, respectively.
For more information on this topic or any other matter related to the COVID-19 pandemic, please contact the attorneys at Wilkerson & Hegna, PLLP. We are open for business and available to address your business needs.