What does the PPP loan mean for employees?

As part of the $2 trillion aid package unveiled in the Coronavirus Aid Relief & Economic Security (CARES) Act, $349 billion was dedicated to the Payment Protection Program (PPP). This offers federal guaranteed loans to businesses with fewer than 500 employees to cover payroll and other essential costs.

Do you have to keep all employees for PPP?

You must maintain at least 75\% of each employee’s total salary. This requirement applies to every employee that received less than $100,000 in annualized pay in 2019 or 2020 (depending on what year you used to calculate your PPP loan amount).

Can you go to jail for PPP fraud?

Depending on the circumstances, the federal government might charge people accused of defrauding the PPP under the following provisions: 15 U.S.C. § 645: Making a false statement to the SBA. This can result in a fine of up to $5,000 and up to 2 years in prison.

Can you lay off employees after PPP loan?

Can I lay off employees after the PPP covered period? If your PPP funds run out and your business has a poor financial situation after the 24-week period, then you are allowed to lay off employees. These employees will qualify for unemployment benefits.

Can you pay your employees more with PPP?

No, and this applies to all small businesses. Keeping your employees laid off and increasing your own pay goes against the purpose of the program. Your forgivable amount would be reduced because your headcount was lower than before.

Can PPP be used to hire new employees?

Borrowers can hire new employees to restore and maintain their original average full time employee headcount. The PPP loan forgiveness application doesn’t differentiate between new and old employees on the payroll.

Can you fire an employee after PPP loan?

Since the majority of loan funds are supposed to be reserved for payroll, employers who receive PPP loans should be able to avoid layoffs and furloughs. Granted, loan recipients are permitted to reduce employees’ pay by 25\%, so you may be paid less than you were before quarantine.

What happens if I get a PPP loan and unemployment?

There is no restriction on receiving both benefits, but as a general rule you should not use your PPP loan to cover your own compensation while at the same time receiving unemployment benefits.

Can I get a PPP loan if I have no employees?

Since you don’t have employees, you won’t be reporting your payroll costs for the PPP loan. As long as your business was operational prior to February 15, 2020, you can apply to the Paycheck Protection Program.

What happens if you can’t pay back your PPP loan?

Loan defaults All PPP and EIDL loans up to $25,000 don’t require collateral or personal guarantees from the business or business owner. So, in the event a borrower can’t repay the loan and defaults, the lender generally wouldn’t be able to seize business or personal assets.

Can I start a business with a PPP loan?

Businesses can apply for a PPP loan as long as they were operational on February 15, 2020, and had paid employees at that time (even if the owner is the only employee).