Paycheck Protection Program Loan Best Practices For Businesses
As your business awaits the opening bell for Banks and Lenders to begin accepting Paycheck Protection Program Loan Applications, it is important to consider the business implications of taking the loan (Get the PPP Application here). Here are a few items we believe are important to consider:
- For the Paycheck Protection Program Loan, make sure LLC Members and Stockholders owning 20% or more of the Company specifically authorize the PPP loan application process
- Review you Company’s Operating Agreement (if an LLC) or Shareholders’ Agreement (if a closely-held stock corporation) to determine the requirements, if any, for the Company to apply for and obtain a loan such as the PPP;
- Review any current Company loans or lines of credit to determine whether applying for a loan such as the PPP triggers any payment provisions of such loans or lines of credit;
- If a vote of the Managers, Members, Directors and shareholders is required to authorize the loan process, determine the steps to obtain and document that authorizing vote;
- Consider placing the proceeds of the Paycheck Protection Program Loan in a separate bank account so that all transactions can be easily traced when you apply for PPP Loan forgiveness
Of course, there are many considerations unique to each business and to each industry. At this time, consulting regularly with your CPA/Accountant, financial advisor and lawyer is critical.
We will update the LaszloLaw Blog as more information is released. LaszloLaw continues to be open to serve our clients and the community. We will continue to closely monitor the situation and will provide updates to you as necessary. On behalf of LaszloLaw, thank you for your trust, your business and your support.
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