The Paycheck Protection Program, also known as PPP, is a form of federal relief facilitated by the Small Business Administration and Congress. It was implemented by the treasury on July 4th. Every small business must adhere to the rules set in the legislation to benefit from the PPP program. Here are some of the critical things restaurant owners must know and follow to gain approval for PPP relief now more than ever given the current circumstances of the world.
Restaurant owners must understand what is meant by payroll
According to the legislation, payroll is defined as the total wages and salaries payable to anyone working within the business, including the withholding amount the remains with the restaurant owner. The maximum amount of forgiveness per employee is $100,000 per year. This amount is inclusive of all benefits that the employer allows his or her employees, including health insurance and pension plans.
Restaurant owners should hire staff immediately when they receive funding
Business owners should understand that these funds were released by Congress to help unemployed Americans receive employment. Therefore, restaurant owners should not wait for the eight-week deadline from the day they receive this money to hire or improve the salaries of existing employees. In case the loaned amount is not accurately accounted for, or the number of employees reduces during the eight weeks, the forgiveness amount of the program will be reduced or scrapped off.
Separate the Paycheck Protection Program loan amount from your company’s funds
Because the company will need to account for all the funds disbursed through the Payroll Protection Program, it is essential to separate the funds received through this program for easy accountability of the items covered by the PPP program. Set up a new account for the PPP funds and inform your financial team to cut all payrolls from that account. Opening a fresh account will also help you ensure you stick to the requirement of using 75% of the money strictly for paying your employees.
Restaurant owners should adhere to these guidelines to ensure they benefit from the 100% forgiveness that the Payroll Protection Program promises, especially during a time of crisis. Make sure you apply for the program if you have yet to do so. Applicants who submitted their documents in April have already received funds from the Paycheck Protection Program by the U.S. Small Business Administration, so act sooner rather than later!