With the coronavirus pandemic significantly impacting American businesses, the U.S. Small Business Administration’s (SBA) Paycheck Protection Program (PPP) was enacted on Friday, March 27, to help small businesses retain their workforces.
As part of the country’s $2.2 trillion stimulus package in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the PPP allows small businesses to secure 100% federally guaranteed loans to cover eight weeks of business operations costs, including payroll, rent, mortgage interest and utilities.
To help navigate the PPP process and provide insights on what the new PPP means for small businesses, including dealers, NADA hosted a webinar on Wednesday, April 1.
Presented by NADA Executive Vice President of Legal and Regulatory Affairs Andy Koblenz, and Executive Vice President of Legislative Affairs David Regan, the webinar, Making Sense of the New SBA Paycheck Protection Program: Practical Consideration for Dealers, outlined that dealerships with fewer than 500 employees and that have paid salaries and payroll taxes prior to February 15 can secure a loan up to 2.5 times the borrower’s average monthly payroll costs. For auto groups with more than 500 employees, eligibility affiliation rules may be waived under certain criteria.
“Our focus at NADA has been on dealer liquidity,” said Regan. “We are aware of the dealerships need for working capital at a time like this.”
Ultimately, the PPP provides $350 billion for 100% federally guaranteed loans for eight weeks. After eight weeks, SBA will forgive the loan if all dealership employees remain on the payroll.
Additionally, Koblenz and Regan provided nearly 6,000 dealers on the line with an overview of the PPP application process, which can be submitted starting on Friday, April 3.
“Matters [related to the SBA PPP] are changing on an hourly if not a minute-by-minute basis,” Koblenz shared with dealers. “There will be individual circumstances that matter dramatically. NADA encourages all of our members to work with their individual advisors, including lawyers and CPAs, to identify how these rules, opportunities and programs relate them individually.”
The PPP will be available through June 30, 2020.
To stay up-to-date on the latest coronavirus-related government advocacy, regulatory compliance, educational resources, webinars and government resources, visit the NADA Coronavirus Hub.
Note: NADA’s webinar is offered for general informational purposes only and is not intended as, and does not constitute, legal or account advice. It is important that dealers consult with their tax advisor for guidance on their individual tax planning and reporting responsibilities.