Key Employee Retention Plan

The COVID-19 pandemic has decimated the income and profit streams of small businesses across the country, many of which were already on less-than-solid financial ground. Various state and federal measures have been enacted to provide individuals and businesses alike with some amount of financial relief during the severe economic downturn. In late March, Congress passed and the president signed the $2.2 trillion CARES Act, a historic economic stimulus package that includes $349 billion for the Paycheck Protection Plan (PPP). 

What is the Paycheck Protection Plan?

The PPP is a vehicle for small businesses to help provide payroll for their employees, including benefits. It can also be used for mortgage interest, rent, or utilities that applied to your business before Feb. 15, 2020. Businesses may receive two months’ worth of average payroll costs, plus up to 25 percent of non-payroll costs for a maximum of $10 million per business and $100,000 per employee. There is no need to offer any property as collateral. April 10 is the date in which all businesses may apply for a PPP loan. The deadline for applicants is June 30, 2020. 

Using the 162 Employee Retention Bonus

To further ensure that you are able to hold onto your key employees, you should consider using a 162 Plan and place money you gain from the PPP into that tax-free life insurance policy. A 162 Plan takes seven years to mature, after which your employees can access the funds. If your employees leave before the date of maturity, then your business can pocket the money for further financial security. 

Putting Your Business in a Good Financial Position

The PPP is intended to save businesses and their essential operations. This means that to take full advantage of the PPP, you might have to make difficult decisions – including cutting non-essential employees. As long as you use the PPP funds for qualified expenses (payroll, mortgage interest, rent, and utilities), the loan will be forgiven. Though you have until June 30 to apply, applications will close after the $349 billion allocated for the program has been used up. 


If you’re worried about the future of your small business, know that some help is on the way. The recent CARES Act contains some avenues for companies to hold on during the COVID-19 pandemic, including the Paycheck Protection Program (PPP). It is attractive on its surface, but with some creative, out-of-the-box thinking, you can accomplish many things with PPP funds, including retaining some vital employees. If you are looking for further guidance using this program or need help making sure your business weathers this storm, get in touch with Soterian today at 704-755-5145 or contact us here.

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