It's the first day small businesses can apply for the Paycheck Protection Program as a part of a $2.2 trillion stimulus package.
Some CPA's and banks WAAY31 spoke with said it's been a headache because things have changed on this down to the last minute. Kerry Underwood, a CPA in Tuscumbia, said he filled out the paperwork only to have it change hours later, but now banks in the Shoals said they have the final application and process for the Paycheck Protection Program.
Underwood said every small business that's impacted by the coronavirus pandemic should apply for the Paycheck Protection Program. He said 75% of the money a small business gets must be spent on payroll related expenses like wages and employee medical insurance.
"What the program does. For 2019 If you have W2 expenses or contract labor expenses with 1099's they get to average the year and take two and a half months. That two and half months is what they qualify for," said Underwood. "They have 8 weeks to spend that. 75% of what they spend that on has to be for payroll related expenses, which is wages, medical insurance, retirement, if they contribute to their 401ks, state unemployment, all of that is a payroll cost."
Underwood said once a business gets the money they have 8 weeks to spend it and must show the banks how it was spent.
"If they spend it then it's a forgiven debt. They don't pay it back, if they don't spend it all then it rolls into a loan at one half a percent interest which is almost free and two years to pay it back," said Underwood.
Underwood said big worry with all of this is that banks wouldn't be prepared to handle all of the applications because they were just given guidelines and the final application late last night, plus things were changing down to the last minute.
You can pick up the application at any bank that's participating in the program or get your accountant to help you.