Paycheck Protection Program for Small Businesses

April 2, 2020

The Paycheck Protection Program (PPP) authorizes $350 billion in forgivable loans to small businesses, including restaurants that employ less than 500 employees at one location, due to the COVID-19 crisis. The program is meant to help businesses pay their employees and utilities for 8 weeks while their revenue streams may be limited due to State and county lockdowns. 

The loans will be forgiven as long as:

1. The loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs over the 8 week period after the loan is made; and

2. Employee and compensation levels are maintained. 

Who is eligible for the loan?

Small businesses that employ 500 employees or less, or if your business is an industry described in the SBA’s table of small business size standards. And, as mentioned earlier, if you are a restaurant, hotel, or a business that:

  • falls within the North American Industry Classification System (NAICS) code 72, “Accommodation and Food Services,” and
  • each of your locations has 500 employees or fewer, you are eligible.

For this program, the SBA’s affiliation standards are waived for small businesses, including restaurants and hotels. 

When and Where can I apply?

You can apply through any lending institution that is approved to participate as an SBA 7(a) lending program and additional lenders approved by the Department of Treasury. 

You can begin to apply for the PPP starting April 3, 2020.

View a list of SBA lenders by visiting the Small Business Administration website

What do I need to Apply?

You will need to complete the Paycheck Protection Program loan application and submit the application with the required documentation to an approved lender that is available to process your application by June 30, 2020.

You may also need to provide payroll documentation. 

Navrae has been helping its existing clients by taking the stress out of this work and performing it for them. See how a managed service can save you time during this crisis by getting in touch with us!

The SBA has waived the requirements for you to try and get approval from other lenders prior to applying for the PPP loan. 

The PPP is open for applications until June 30, 2020, however, they recommend filing sooner rather than later since there is a funding cap.

What is the maximum amount you can borrow?

The amount that eligible small businesses can borrow is 250 percent of their average monthly payroll expenses, up to $10 million.  

This amount is intended to cover 8 weeks of payroll expenses and any additional payments made towards debt obligations. 

What can you use the loans for? 

  • Payroll costs, including benefits
  • Interest on mortgage obligations, incurred before February 15, 2020
  • Rent, under lease agreements in force before February 15, 2020
  • Utilities, for which service began before February 15, 2020

What counts as payroll costs?

  • Salary, wages, commissions, or tips (capped at $100,000 on an annualized basis for each employee)
  • Employee benefits including costs for vacation, parental, family, medical, or sick leave; an allowance for separation or dismissal; payments required for the provisions of group health care benefits including insurance premiums; and payment of any retirement benefit
  • State and local taxes assessed on compensation
  • For a sole proprietor independent contractor: wages, commissions, income, or net earnings from self-employment, capped at $100,000 on an annualized basis for each employee

Loan Forgiveness

This is a direct quote from the PPP fact sheet (See more by clicking the link to it at the bottom of the article.

How much of my loan will be forgiven?

You will owe money when your loan is due if you use the loan amount for anything other than payroll costs, mortgage interest, rent, and utilities payments over the 8 weeks after getting the loan.

Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.

You will also owe money if you do not maintain your staff and payroll.

  • Number of Staff: Your loan forgiveness will be reduced if you decrease your full-time employee headcount.
  • Level of Payroll: Your loan forgiveness will also be reduced if you decrease salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019.
  • Re-Hiring: You have until June 30, 2020 to restore your full-time employment and salary levels for any changes made between February 15, 2020 and April 26, 2020.

How can I request loan forgiveness? You can submit a request to the lender that is servicing the loan.

The request will include documents that verify the number of full-time equivalent employees and pay rates, as well as the payments on eligible mortgage, lease, and utility obligations.

You must certify that the documents are true and that you used the forgiveness amount to keep employees and make eligible mortgage interest, rent, and utility payments.

The lender must make a decision on the forgiveness within 60 days.


*******Find out more by going to over The U.S. Senate Committee on Small Business & Entrepreneurship PDF and Paycheck Protection Program (PPP) fact sheet

General Ledger Accounting

October 30, 2019
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The Definition of a General Ledger

A general ledger represents the record-keeping system to sort, store, and summarize a company’s transactions. These transactions are sorted by type of accounts and used to prepare the companies financial statements.

General Ledger’s are typically broken down into these account types:

  • Assets
  • Liabilities
  • Stockholders’ equity
  • Operating Revenues
  • Operating Expenses
  • Non-operating revenues and gains
  • Non-operating expenses and losses

The Workings of a General Ledger

You don’t build anything without a strong foundation and that’s what a General Ledger is, a foundation used by accountants to store financial data organizationally to create financial statements.

Transactions make up a General Ledger and are posted into their own sub-ledger accounts that are defined by the companies. These sub-ledger accounts fall under the types listed about, such as assets, liabilities, stockholders’ equity, etc.

The transactions are closed out and summarized into the general ledger. The accountant or bookkeeper then uses a trial balance to check for errors and posts addition entries as needed.

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Chart of Accounts

As mentioned earlier, the sub-ledgers that define the companies transactions are also known as the Chart of Accounts.

"The chart of accounts allows you to find the name of an account, its account number, and perhaps a brief description. It is important to expand and/or alter the chart of accounts to accommodate the changes to an organization and when there is a need for improved reporting of information."

Harold Averkamp

Double Entry Accounting

Since the discovery of double-entry accounting, it has been used by every type of business, no matter their size.

The practice of double-entry accounting records every transaction twice into a debits and credits column. This ensures each transaction affects at least one debit and credit column.

Double-entry transactions, or journal entries, are posted in two columns with debits on the left and credits on the right. The total of the debits and credit entries must balance.

Types of General Ledger Reports

Data that comes from the general ledger can be used to produce a variety of reports to show the status of a companies finances. Two of the more frequently used reports are the Balance Sheet and the Income Statement.

Reports can be used by financial institutions, investors, owners, and shareholders to analyze the well-being of the business over time. 

Reports coming from the data provided by the GL can also be used to identify errors or possibly even fraud. 

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Cloud Based Accounting

October 23, 2019
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Cloud Based Accounting

In today’s fast paced world, you need a cloud based accounting system that will allow you to access and manage information on the go. 

While traditional systems may still have their place in the business world, over Three Quarters of small businesses will utilize cloud technology by 2020

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