The Silvertrac Extra
CARES Act: What You Need to Know for Contract Security
All of the money from the Payment Protection Program (PPP) disappeared just 14 days after it was made available. We wanted to give you a quick update about where all of that money went and what might be coming in the near future.
Where did the money go?
- The first round of PPP loans went out to 1.6 million businesses - about 6% of the total amount of small businesses in the US.
- 74% of all loans were for under $150,000 - meaning mostly very small businesses received loans
- Some large companies like Ruth’s Chris Steak house and Shake Shack got millions of dollars from the PPP. This was because of wording in the rules that let some companies that don’t employ more than 500 people at one location, instead of in total, get funding.
- Companies, including Shake Shack, tried to pay back the money to help small businesses, but that money can’t be redistributed as new loans until Congress votes to have a new round of money approved.
- Congress is debating on a vote to make more money available through the PPP.
- As it stands, all the rules of the PPP will stay the same and another $250 billion in loans will be made available.
- Some members of Congress would like to see $250 billion added - $100 billion specifically for hospitals and $150 billion for state and local governments.
What should you do?
- Keep yourself updated with the news. As soon as new funds are made available, you need to move fast
- Stay in communication with your local bank. Having a good relationship with them should get the ball rolling a lot faster
Check back here for updates. The Silvertrac Extra is being regularly updated with new information on the impact of Coronavirus on contract security in general.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed on March 27, 2020, by President Trump and is a $2 trillion package with the goal of helping fight against the damage done to the economy by shelter-in-place and socially distancing orders.
We wanted to provide small business contract security firms with the most important information on how to benefit from this act. Keep in mind that we are not experts in the area of accounting and payroll. Please talk to your financial advisor or the bank you use to conduct business for professional advice.
This article is focused on the Payment Protection Program (PPP) because that is the most popular part of the CARES Act for small business owners. This PDF from the US Senate will give you information on all of the relief packages available and is where we pulled a lot of this information. We will be looking at:
- What is the Payment Protection Program (PPP)?
- Who is Eligible?
- How to Apply for a PPP Loan
- Important Notes
If you want more resources about the CARES Act, check out the SBA website or the US Treasury website on small business assistance. If you want more information on how COVID-19 is affecting physical security as a whole, check out our COVID-19 update blog.
What is the Payment Protection Program?
The Payment Protection Program (PPP) is $349 billion in federally guaranteed loans available for small businesses and nonprofits to maintain their daily operations, pay employees, and bring back employees that were laid off because of COVID-19. This $349 billion is not federal funding. You need to go through your local bank to receive money.
The PPP loans are also fully refundable. You don’t have to pay back a penny of what you are given as long as you use it to cover the right expenses. The same PDF from above has a Q&A section that covers every cost in more detail.
- Payroll costs (Wages, tips, paid leave, dismissal, benefits, retirement payments, and taxes can all be paid with a PPP loan.)
- Interest payments on mortgages
- Interest on debt you had before February 15, 2020
If you receive a PPP loan and don’t use the money on the things listed above, you will have to pay back the loan with interest.
Who is Eligible?
There are a few things you need to look at to determine your eligibility to receive a loan. First, because it is designed for small businesses, the PPP is only for companies that have less than 500 employees.
Sole proprietorships and independent contractors are also covered, so if you’re running a guard operation solo or you’re not on payroll at a security company, you can still receive money.
As far as paying employees, anyone who is currently on your payroll and anyone who was on your payroll as of February 15, 2020, can receive payment. Again, part of this program is to help you bring back employees you had to lay off.
Any employee that has received sick or family leave pay through the Families First Coronavirus Response Act cannot be counted in the payroll report for the PPP.
Any employee who makes more than $100,000 in a year can only have $100,000 counted towards payroll expenses.
Applying for a PPP Loan
You can apply for a PPP loan at the Small Business Association (SBA) website. $349 billion seems like a lot of money, but with 30.7 million small businesses in the US, that money will go fast.
Get in contact with your bank as soon as possible to get the process started, especially if you use a smaller, local bank. The money is going to be distributed on a first-come, first-served basis, so time is definitely important.
After you have submitted your application, stay in contact with your bank and your local SBA office about the status of your application.
The Senate PDF gives this information as well, but this is the basics of how you figure out how much money you can receive.
- For every company that applies, the loan will be for 2.5 months of total payroll or $10 million, whichever number is lower.
- If your security company was in business between 2/15/19 and 6/30/19:
- Add together payroll for February, March, April, May, and June of 2019
- Divide that number by 5
- Multiply by 2.5
- If your security company was not in business between 2/15/19 and 6/30/19:
- Add together payroll for January and February 2020
- Divide that number by 2
- Multiply by 2.5
Your payroll report needs to be complete and correct. Make sure you work with your financial team to get all your numbers in order before you submit your application.
Before you submit your PPP application, there are a few important things to keep in mind
- If ANY part of your application is wrong or incomplete, you’ll have to make the changes and resubmit the application. That will put you to the back of the line and means it’s less likely you’ll receive a loan.
- The money will go fast, and when it’s gone, it’s gone. If you need this money to keep your business running, act now.
- There are other options for getting financial assistance as a business owner. You can check them out here. We covered the PPP because it is the most popular option other business owners are looking at.
If you have other questions about HR and payroll during the COVID-19 crisis, check out this blog.
If you have any other questions about the status of the security industry and how to change your operations during this time, check out this blog.