PPP 2020 What you need to know

Things are constantly changing with PPP and here are PPP updates that you will want to make sure you fully understand as it will affect your forgiveness process and your money.

  1. There are 2 PPP apps for forgiveness. The updated PPP Loan Forgiveness Application and a PPP EZ Forgiveness Application.

  2. Among the changes to the PPP in recent weeks are that the SBA is extending the period from 8 weeks to 24 weeks, reducing payroll costs from 75% to 60%, and establishing a safe harbor for companies. companies that have not been able to return. at the level of business activity prior to COVID-19.

  3. The revised PPP loan forgiveness application includes changes for the FTE to apply from the application date versus waiting until December 31, 2020. However, we recommend that you do not wait until the end to apply. . Apply as soon as you have spent the dollars and meet the various requirements; They vary depending on whether you are using the 8 week or 24 week option.

  4. Borrowers who received PPP loans before June 5, 2020 can choose to use the original 8-week period or the new 24-week period.

  5. The new EZ app can be used by those:

    1. That they are self-employed and have no employees,

    2. It did not reduce the wages of its employees by more than 25% or reduce the number of hours of its employees or

    3. Those who experienced reductions in business activity and did not cut their employees’ wages or salaries by more than 25%.

  6. The new week of 24 allows maximum loan forgiveness at $ 46,154 per employee versus $ 15,385 in the eighth week. NOTE: Schedule C taxpayers cannot increase their owner’s compensation during the 24-week period at that level. It remains a maximum of $ 15,385 for the 8-week period (8/52 of 2019 net income) and $ 20,833 for the 24-week period (2.5 / 12 of 2019 net income). It’s the fine print here that will catch some, so be sure to visit your Professional Accountant.

Check out these 2 resources for more information:

  1. US Department of the Treasury website here.

  2. New PPP application released here.

Many have already passed the 8 week point and banks are still not accepting forgiveness requests. The SBA was quick to grant funding and kept the rules very vague, but almost weekly we are learning more and more details. They have yet to give lenders firm guidance so they feel comfortable opening the forgiveness process. We expect it to arrive at the end of July 2020, but we may find that it will arrive until August before we can begin applying.

No one knows if they will continue to review and modify the PPP forgiveness process or if we will start to see banks accept forgiveness requests as soon as some PPP recipients have already completed the 8 week period. The key is to apply sooner rather than later once you have spent the dollars within the guidelines and the banks have opened forgiveness requests. Don’t wait unnecessarily as you may find ongoing changes to be unfavorable … hard to tell.

The keys for the forgiveness process to run smoothly are:

1. Have good accounting records.

2. Make sure you read the fine print about where you can spend the money.

3. Keep copies of bank statements and invoices to provide the documentation your lender is likely to want.

4. If you don’t have a good relationship with an accountant, now is the time, as they are more valuable than ever.