May 27, 2020
The following are the rules for the Paycheck Protection Program — especially in relation to maximizing Loan Forgiveness. Regulations and guidance from the government have evolved and we will continue to keep you updated on changes moving forward.
Borrowers are eligible for loan forgiveness equal to the amount the borrower spent during the eight-week period—beginning from the date you received loan funds. Also, not more than 25% of the forgiven amount may be used for non-payroll costs.
The following items qualify for loan forgiveness:
To Maximize Loan Forgiveness, Keep a Few Critical Items In Mind
The Paycheck Protection Program is intended to help businesses maintain employees. Therefore, using the PPP loan for payroll purposes, first and foremost, is the best way to help ensure maximum loan forgiveness.
The following items can reduce your loan forgiveness:
NOTE: If you received an EIDL Advance of up to $10,000, that amount will reduce loan forgiveness.
To Maximize Loan Forgiveness, Consider the Following:
NOTE: We recommend that if you extend an offer to rehire an employee, do so in writing. In the event the person chooses to not return to work, you now have documentation that the offer was made and the employee declined it. This protects you from being penalized for not re-hiring.
The Importance of Record-Keeping:
Ensure that you follow the specific guidelines provided by your lender in relation to documentation. You will be asked to provide documentation when it comes time to determine the amount of loan forgiveness. Maintain detailed records of loan spending, especially on payroll costs. Also, be sure to record other qualifying expenses like rent and utilities.
Lenders will collect documentation in order to calculate your forgiveness amount. Lenders have 60 days to make a determination on the amount of loan forgiveness.
Any amount that is not forgiven must be repaid like a normal loan. While interest begins accruing immediately (at the 1.0% rate), the first loan payment is not due for six months after the loan originated. The outstanding amount must be repaid within two years.
Prepayments are allowed if it’s determined that a portion of the loan must be repaid—beginning any time or paid over 18 months if you begin making payments at the six-month mark.
Not Too Late
You should note that as of 5 pm yesterday, May 20, 2020, $148 billion of the $660 billion approved for the program has not been committed. So, if you were considering applying for PPP funds but thought it was too late, that is not the case.
We Are Here to Help
Please reach out and let us know how we can help you. Our team can assist with record-keeping and provide sound advice to ensure you follow the guidelines to maximize loan forgiveness.
The U.S. House of Representatives unanimously passed a five-week extension of the Paycheck Protection Program (“PPP”) on Wednesday, July 1. The House action follows the Senate’s approval of a five-week extension on Tuesday night. The bill will now be sent to President Trump who is expected to sign it into law.
It’s hard to believe that we are already into July. Even with the deadline for filing your return and making a payment (if you owe) being extended to July 15, 2020, it still seemed like it came upon us fast. With only a few weeks left, be sure to get any final documents to us and answer any outstanding communications immediately.
New gardeners have come out of the woodwork this year, looking to create a sustainable food supply in their own backyards. Of course, not everyone has the space or the time to create a full-on outdoor garden. So, why not start small…and indoors?