The deadline for Paycheck Protection Program (PPP) applications is June 30th – if you haven’t applied, and you have experienced, or foresee the potential for “economic uncertainty” caused by the pandemic for your business you should consider applying.
The PPP process has certainly been a bumpy road, with many twists and turns along the way. It came off the starting line with engines roaring and tires spinning with the widespread speculation and expectation that this program was going to be “first come, first serve” – the program ran out of funds in 12 days! It took the government a couple, 2, 3 weeks and there was more freshly printed money in the kitty – shockingly, approximately $100 billion is still there! There were multiple rule changes, clarifications, and take-backs that have led to much frustration, but overall, this program is serving the small business community well.
The biggest adaptations were:
- the extension of the “covered period” from 8 weeks to 24 weeks;
- the reduction in payroll expenditure required from 75% to 60% of the loan proceeds;
- the safe harbor head count requirement being pushed out to December 31st; and
- the ability to exclude from a reduction in head count those employees who do not wish to return to work.
All of these lead to a more friendly and accessible program.
So – long story short… if you have not applied, and you think you should, its time to get on it. If you want to chat it through, please don’t hesitate to reach out directly.
For those that have applied, or will apply, big changes in the land of Forgiveness. Now there is not just one… but two different applications for Forgiveness.
EZ Forgiveness Application
- are self-employed and have no employees; OR
- did not reduce the salaries or wages of their employees by more than 25% and did not reduce the number of hours of their employees; OR
- experienced reductions in business activity as a result of health directives related to COVID-19 and did not reduce the salaries or wages of their employees by more than 25%
Loan Forgiveness Application
The Small Business Administration (SBA) and Department of Treasury have released a simpler PPP revised full forgiveness application. The new version is just five pages long compared to the original 11-page application released in May and is intended to make it easier for businesses to realize full forgiveness of their PPP loan.
Again, Because This Is A Big Deal… Covered Period Extended
Both applications give borrowers the option of using the original 8-week covered period (if their loan was made before June 5, 2020) or an extended 24-week covered period.
Excited About Forgiveness
While the SBA has released these applications and have put out guidance regarding forgiveness – they have indicated that these “may” not be the final versions, and they (the SBA) are not yet accepting the applications from your lending institutions – so a little more patience is required. Take the time to gather all the proper documentation – payroll records, rent rolls, leases, group health insurance premiums, company sponsored retirement benefits, etc. so that you are ready when the banks are.
We will be putting out a new spreadsheet in the next couple days to help you run your calculations – we expect the banks to have their own but it will benefit you to be prepared.
What Do You Mean My Loan (or part of) Is Not Forgiven?
If a loan is not forgiven, a business will have five years at one percent interest to repay the loan.
I hope everyone is having a great start to their summer and is prospering as the economy begins to reopen.