CARES Act – Planning COVID-19 Re-Hires and Payroll Protection Program Loans
By: Timothy Lynn
Planning Issues for Re-Hiring Employees and Payroll Protection Program Loans
It is laudable and noteworthy that the Payroll Protection Program SBA 7(a) loan program accommodates the many businesses that have been crushed by COVID-19 and the mandatory closures in New York and many other states. The impact on employees has also been severe. Over 3 million people laid off, a number that is growing.
As mandatory business closures continue for the foreseeable future, each employer who has been unable to maintain their pre-crisis employment levels should look at a Payroll Protection Program loan as a way to help the business survive or thrive at the eventual end of the crisis and to help get their employees back at work, earning wages and receiving group benefits.
The rules for the timing of closing of a Payroll Protection Program loan, the definition of expenditures that make a borrower eligible for loan forgiveness, and the rules for re-hiring employees that have been laid off because of COVID-19 are complicated. Great care should be taken in understanding the rules and planning the timing and use of the loan to maximize the benefit to employers and getting people back on the payroll.