The Paycheck Protection Program loan forgiveness application is now available
The PPP loan forgiveness application was released last week. The application included complex calculations and left many unanswered questions. We’ve received a few clarifications this week. There has also been movement on Capitol Hill in an attempt to help address the uncertainties that many small businesses have expressed in the process.
What’s in process?
The HEROES Act
Last Friday, The House narrowly passed another major relief bill in hopes of helping state and local governments, small businesses, renters, homeowners, and many others that have been impacted by current crisis. Titled the HEROES Act (Health and Economic Recovery Omnibus Emergency Solutions Act), the House addressed some of the questions of the Paycheck Protection Program that have been lingering as part of a broader $3 trillion relief bill. However, it is highly unlikely the Senate will take up this bill in its current form.
The Paycheck Protection Program Flexibility Act
Reps. Chip Roy, R-Tex and Dean Phillips, D-Minn, introduced the Paycheck Protection Program Flexibility Act in the House. The bill addresses specific issues with the PPP program outside of the larger relief bill. More specifically, it’s focused on changes to the program in hopes of providing more certainty to small businesses. This bill will be voted on by the House next week. It has a good chance of passing the Senate in some form after the Memorial Day break. President Trump has also indicated support for this bill.
Major concerns of small business have been the eight-week period in which the funds must be spent, as well as the requirement that at least 75 percent of the funds must be spent for payroll expenses. This puts more capital-intensive industries at a disadvantage for loan forgiveness. The bill helps expand the eight-week period to 24 weeks for expenses, and eliminate the requirement to spend at least 75 percent of the funds on payroll. Additional items would include allowing the use of payroll tax deferment in conjunction with PPP loans (currently not allowed), expanding the repayment period to the maximum 10 years (from the current two years), allowing additional time to rehire employees, and allowing a deduction for those expenses paid for by the forgiven funds, which the IRS has indicated would not be deductible.
Good news for small businesses and the estimated more than 50 million employees that have been helped by this program.
More guidance to come
SBA and Treasury sources have indicated that a number of new frequently asked questions will be released soon to provide further guidance, possibly as soon as this weekend. It is hoped that this guidance will provide small businesses with greater certainty to help them plan their recoveries. The release of the forgiveness application has revealed the extensive calculations that are a part of this process which should be further clarified by these FAQs, including when the application will need to be filed. While legislative and guidance changes are forthcoming, we recommend waiting to see how these changes affect the forgiveness process before attempting to complete the application.
Your Chortek team is ready to answer your questions to assist you with this process. If you are a small business have and haven’t yet applied for a Paycheck Protection Program loan, there are still funds available in the program. It is not too late to apply.