Making the Most of SBA Funding

May 5, 2020 | All News & Events

PPP loans have the possibility to be a business-saving resource for your company, and many businesses have already started to become approved for these loans. Every business is unique, and the terms and conditions of the PPP loan may not work for all. Many options are available for how to use the funds, and the following points can act as guidelines for how your business will continue with the loan process. 

You’ve been approved for the PPP loan, now what?

Decline the loan: 

If your business is already closed, then bringing back employees may not be a realistic or needed option, and in many cases employees are making more in employment than on payroll. This, in addition to the uncertainties of how long businesses will remain closed, means that the PPP loan may not be the best option. 

Accept the loan and continue to maintain staff: 

In this scenario, the business would accept the loan and continue to keep staff on payroll as if they are all working, even if the business is closed or at reduced capacity. This reduces the risk of losing employees during long periods of unemployment, and any part of the loan not forgiven turns into a simple 1% loan to be paid back over a 2 year period. 

Accept the loan and not increase employee wages or hours worked:

When businesses cannot justify keeping staffing levels the same before the social distancing orders, but need to maintain cash flow, this may be a viable option. This is done knowing that the remainder of the loan will not be forgiven, and rather turned into a regular loan with 1% interest. During times of extremely low or no revenue to pay employees, accepting the PPP loan may help keep the business running. 

Employee Retention Tax Credits:

This option is for employers whose business has been affected by at least 50% or more compared to the same quarter in the last calendar year. Employers can claim 50% up to $10,000 in qualified wages ($5,000 in tax credits) for continuing to pay employees (retaining them).  This works for some businesses, not all. Employers that have a PPP loan are not eligible for the Employee Retention Tax Credit.

Tax Deferrals:

Employers that have a PPP loan are not eligible for tax deferrals. Employers choosing this option can defer paying the employer portion of FICA taxes between now and the end of the year and pay it back over 2 years.

Once you’ve made the decision on funding it’s time to start planning for recovery!  Employers need to start the look ahead to the next quarter and the next few years. The quarantine won’t last forever but the fall out may last considerably longer. Those that are prepared or have a plan may be able to handle the recovery better than those with no plan.

Here are questions to ask yourself as you start to plan.

  • Which employees are essential and needed to begin the ramp up?
  • Do new job descriptions need to be written?
  • Will each employee be returned to the exact same position or will a reorganization happen? 
  • Phasing employees back based on demand may be required.  What does that look like?
  • Do you need to rewrite some employee policies or the employee handbook?  When employees return, it is good to roll out any revised company policies at the same time and collect signatures from them as you bring them back.
  • What training needs to be addressed?  For example?  OSHA training for disinfecting work areas (don’t forget those  MSDS info sheets!), are gloves and masks required or not, retraining for social distancing, anything else that may affect the business processes as demand begins to increase?
  • What communications are going out to the public or clients on the status of the business and when it is re-opening. 

Thank you to Brenda LaMarche of BRL HR Consulting for providing guidance on this document. 


Here are a few additional resources for planning to reopen your business:

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