Articles > Coronavirus > Payroll Protection Program: Everything You Need To Know!
April 6, 2020

Payroll Protection Program: Everything You Need To Know!

close formula

Payroll Protection Program: Who is it for, How To Apply & What To Expect! 

We explained what the coronavirus stimulus package means for hairdressers, so now we’re taking a deep dive into one specific topic: the Payroll Protection Program. This loan helps you pay your staff until they can get back behind the chair. Keep reading for everything you need to know about the Payroll Protection Program!


Have informative discussions with other hairdressers, get free resources for your salon and stay updated with news on the NEW BTC Forum! Click here to join the conversation and stay connected! 


Payroll Protection Program (PPP Loans)

What is it? A 100% federally guaranteed loan to help small businesses maintain employment and pay payroll costs. Some amounts will be forgiven, meaning you will not have to pay them back, under certain criteria.


Who can apply for it? Any small business that has been in operation since February 15, 2020 and has less than 500 employees. This includes independent contractors and self-employed works, who can apply for PPP loans beginning April 10, 2020.


Some key takeaways:

  • PPP loans are available until June 30, 2020. 


  • Maximum loan terms are: 10 years, 4% interest, $0 loan fees, $0 prepayment fee. 


  • The maximum loan amount is $10 million dollars. 


Note: If your business is part of a franchise or affiliated with a larger business, please visit here for more information.


Where to Apply

Small businesses can apply for Payroll Protection Program loans through any Small Business Association accredited lender. However, if you have an established relationship with a financial institution, you are encouraged to apply directly with them. 




Determining Your Loan Amount

  • Businesses that were OPEN between February 15, 2019 through June 30, 2019: the maximum loan amount is equal to 2.5 times the average total of monthly payroll costs. 


  • Businesses that were NOT OPEN between February 15, 2019 through June 30, 2019: the maximum loan amount is 2.5 times the average total of monthly payroll costs between January 1, 2020 through February 29, 2020.


Eligible Payroll Costs

  • Compensation (salary, wages, commissions, payment of cash tips etc.).


  • Any paid employment leave including: vacation, family, medical, parental or sick.


  • Payments made when an employee is dismissed or leaves the company.


  • Payments made to employees’ health care benefits, including insurance premiums.


  • Payments made to employee retirement benefits.


  • Payments made on state and local taxes for employee wages.


Non-Eligible Payroll Costs

  • Employee salaries exceeding $100,000.


  • Specific taxes withheld or imposed by the IRS code under chapters 21, 22 and 24.


  • Employee salaries who reside outside of the United States.



Other Permitted Costs

  • Rent (including under a lease agreement)


  • Interest on mortgage payments


  • Utilities


  • Interest on any other debt obligations 


Applying For Loan Forgiveness

If you use 75% of the PPP loan for payroll expenses, and these expenses fall into the below criteria, you may not need to pay the loan back:

  • Payroll costs (up to 8 weeks and not exceeding $100,00 per employee) + interest payments made on mortgage obligations + payments made towards rent + any covered utility payment. 


  • Employee and compensation levels MUST be maintained in order to receive loan forgiveness


What You Need To Prove To Have Your Loan Forgiven

Provide the following documentation to your lender when you apply for loan forgiveness: 


  • Verification of the total number of employees including pay rate, IRS payroll tax filings, state income tax filings as well as payroll and unemployment insurance filings.


  • Verification on payments made to mortgages, lease rental agreements and utilities. 


  • An authorized certification stating that the applied forgiveness amount is true and is within the loan forgiveness guidelines.


For more information about the Payroll Protection Program, click here. 


What does the CARES Act mean for hairdressers? Click here to read all about it!