As the June 30, 2020 deadline for acquiring a Paycheck Protection
Program Loan (PPP Loan) approaches, borrowers remain faced with a number
of details that may impact PPP Loan forgiveness. Below are a list of
updates and reminders as borrowers begin to work with their CPA and
lender on preparing for loan forgiveness.
- The Paycheck
Protection Program Flexibility Act of 2020 (Act) offered borrowers a
number of adjustments for consideration. The intention of the Act was to
provide borrowers with flexibility in the use of PPP Loans and
potential loan forgiveness. The details of the Act are available here.
- Two
updated PPP Loan Forgiveness applications were issued on June 16, 2020,
the standard application and an EZ application. While the structure of
the standard form remained unchanged, the application addressed some
questions not otherwise answered by the Act mentioned above.
- The
EZ version of the PPP Loan forgiveness application is available to
borrowers who certify they meet one of the following criteria:
- The
borrower is a self-employed individual, an independent contractor, or a
sole proprietor who had no employees and did not include any employee
payroll in the average monthly payroll when they applied for the PPP
Loan.
- The borrower is not subject to the salary and wage reduction limitation on forgiveness during the covered period AND
did not reduce the number of employees or the average paid hours of
employees between January 1, 2020 and the end of the covered period.
- The borrower is not subject to the salary and wage reduction limitation on forgiveness during the covered period AND was
unable to operate during the covered period at the same level of
business activity as before February 15, 2020 due to compliance with
sanitation, social distancing, or work / customer safety requirements
and standards established by the Secretary of Health and Human Services,
the Director of the Centers for Disease Control and Prevention, or the
Occupational Safety and Health Administration.
- It is important
to remember that despite qualifying for the EZ version of the PPP Loan
forgiveness application, borrowers must maintain detailed documentation
supporting the certification qualifying them for the simplified
application. Thus, the borrower must maintain records showing decreases
to average salaries did not exceed 25% for any employee and records
showing that full-time equivalents did not decrease compared to certain
reference periods. Also, documentation regarding the sanitation, social
distancing, and work / customer safety requirements and standards
applicable to each borrower location must be maintained.
- The
Small Business Administration (SBA) and the Department of the Treasury
(Treasury) struck an agreement with bipartisan leaders of the Senate
Small Business Committee to share additional information regarding PPP
Loan borrowers with the public. For loans of $150,000 or more, the
disclosures will include the business name, address, NAICS code, zip
code, business type, demographic data, non-profit information, and jobs
supported grouped by loan amount ranges.
It is still
expected that the SBA will issue additional guidance addressing many
unanswered questions about PPP Loan forgiveness. RubinBrown is
constantly monitoring SBA and Treasury releases and will be holding a
webinar to provide a comprehensive yet practical review of PPP loan
forgiveness after this information is released.
If you have question regarding PPP Loans please contact your RubinBrown team member for assistance.
Readers should not act upon information presented without individual professional consultation.
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