Posted on April 30, 2020
Back in March, ACNJ conducted a survey to evaluate the impact the COVID-19 pandemic has had on the child care community to date. To address the concerns raised, we held multiple Q&As with leading authorities to help navigate the resources available to the child care community. Here is a list of questions from the surveys and Q&As, as well as emails, conversations with members in the community and information found on the New Jersey Child Care for COVID-19 website.
FAQ's About the Payroll Protection Program and the Economic Injury Disaster Loan:
Small businesses, including certain eligible nonprofit entities, for‐profit, and self‐employed businesses with fewer than 500 employees are eligible to apply.
Yes, sole proprietors, independent contractors, and self‐employed persons are eligible to apply for both loans.
PPP: An applicant must apply through an eligible lender or bank. A current list of lenders can be found here: https://www.sba.gov/paycheckprotection/find Currently, TD Bank, PNC Bank, Kearny Bank, and Spencer Savings Bank will process applications even if an applicant does not have an account with them. If an applicant learns of other banks that accept applications from non‐account holders, please contact firstname.lastname@example.org. However, applicants should start their search with the bank in which they do business. If the home bank is not accepting applications, the prospective applicant should ask their bank for recommendations or contact the above-named banks. The PPP application form should be submitted to an eligible lender: https://www.sba.gov/document/sba-form--paycheck-protection-program-borrower-application-form
EIDL: The EIDL application is submitted directly to the Small Business Administration (SBA) here: https://www.sba.gov/disaster-assistance/coronavirus-covid-19#/
An applicant can apply for both the EIDL and PPP loans. If an applicant receives both, the amount of the EIDL loan will be rolled into the PPP loan.
PPP: The information needed to apply for the PPP may differ depending on the lending institution. Reviewing the above link to the PPP application will help determine the specific information required. Each lender will advise as to whether any additional information is required.
EIDL: The information required for the EIDL must be completed in one sitting, as information cannot be saved on the website. The website indicates to allow at least two hours to complete the application. The application should be reviewed beforehand so that the applicant has all the necessary information at-hand needed to complete it.
PPP: The PPP loan application will be available until June 30th but it is first come, first serve until there is no longer funding available.
The EIDL will be available until all funds are depleted and it is also, first come, first serve.
PPP: Banks particicipating in the PPP have 10 days to disburse the loan proceeds once the loan is approved. The bank may opt to disburse a portion of the loan and ask for an account of how the money is being spent before disbursing the remaining funds. Applicants should talk with their banks to determine how the funds will be made available.
EIDL: The EIDL loan advance is automatically deposited into an applicant’s account three days after the application has been processed. However, due to the overwhelming response rate, the timing is no longer guaranteed. The balance will be dispersed based on individual circumstances.
PPP: In order for the PPP loan to be forgiven, it must cover 75% of payroll expenses and expenses related to payroll such as associated healthcare insurance and 25% of other business operating expenses. Legislative language ( https://assets.documentcloud.org/documents/6819239/FINAL-FINAL-CARES-ACT.pdf page 11) clearly says that “payment required for the provisions of group health care benefits, including insurance premiums;” are included in payroll costs. For an explanation, the Wall Street Journal notes, “What are payroll costs?” Payroll costs include what you would think: salary, wages, commissions, or similar compensation, as well as tips, for employees in the United States. It also includes payment for leave (including vacation, parental, family, medical, or sick leave but not those that you get a credit for under the Families First Coronavirus Relief Act); severance packages; employee group health care benefits; and state and local taxes on compensation. If you are an independent contractor or sole proprietor, it refers to your wage, commissions, income, or net earnings.”
EIDL: The EIDL loan covers general support such as equipment costs/leases and any other costs associated with business continuance.
FAQ's About the Payroll Protectition Program (PPP):
The PPP payroll cost calculation will depend on the lender. Most banks are requesting the average payroll information for a 12‐month period, either the calendar year 2019 or the immediate 12‐month period prior to applying for the loan. Applicants should check with their lender to determine which payroll cost calculation they prefer. If a business is new or seasonal, special calculations will need to be made.
A PPP loan will be forgiven if:
1. 75% of the loan is used for payroll expenses; and
2. If employees are kept on payroll for eight weeks (up to June 30th)
The PPP loan must be paid back within two years and there is an interest rate of 1%. Loan payments will be deferred for six months and there is not a prepayment penalty.
Yes, applicants can apply for the PPP if staff have been laid off, but they must be rehired in order for the loan to be forgiven.
Loan applicants can use the PPP loan proceeds for their staffs ad themselves on payroll, healthcare costs, pension benefits as well as utility costs, rent expenses and mortgage interest on business mortgages. After receiving the loan, if the full staff is not rehired prior to the eight‐week period, or staff salaries have decreased more than 25%, the full loan will not be forgiven.
The PPP loan will be reassessed at the new payroll rate and the loan recipient will be responsible for the balance of the loan if the number of employees rehired are fewer than the amount stated in the application.
Each employer is reassessed at the new percentage and will be responsible for paying back the difference, if the new rate is less than the original rate in the application.
The PPP is an eight-week spending program. If employees are paid during those eight weeks, employees are eligible again after the eight weeks for unemployment unless the PPP is modified.
The remains of the loan, after the eight weeks, will need to be repaid.
Yes, all child care programs that closed either before or after the state mandate can apply for the PPP. For the loan to be forgiven it must be used to continue to pay staff, utilities, rent, or mortgage interest during the eight week period.
Yes, associated health benefits may be covered with funds from the PPP.
Yes, if it is business-related.