Dispatch #13 - Paycheck Protection Program (PPP) Loans through the CARES Act

Should your firm apply for a Paycheck Protection Program (PPP) loan under the CARES Act?

Maybe.

PPP loans offer certain companies the opportunity to borrow money at a low-interest rate and with a high likelihood of partial or full forgiveness. For others, that simply won’t be the case. The calculations and rules are complex, and we’re all just beginning to understand them, including how they pertain to contractors.

Do your initial due diligence and if it seems promising, designate a point person to take the next steps, most likely your Controller or CFO.

Important context:

• There are two emergency loan programs for small businesses: the PPP and the EIDL (Economic Injury Disaster Loan Assistance). Here is a PPP/EIDL comparison chart published by a CPA firm (link courtesy of BizReady, Inc.);

• The CARES Act has other benefits for contractors and individuals, so familiarize yourself with these as well.

Explore the PPP program, but temper your enthusiasm:

• Don’t neglect the other things you’re doing to manage the COVID-19 situation, like collecting A/R, forecasting cash flow, and leveraging the FFCRA;

• If you do want to apply for a PPP loan, consider getting help from an outside consultant, your banker, or the SBDC to shortcut your evaluation and (if) application process.

Need help with this or other financial matters faced by construction contractors? Let’s talk!

David Stern CFO makes every effort to provide useful and accurate information. This content, however, is not intended as a substitute for specific business-related financial advice. We disclaim all warranties and liabilities from its use.