As we are nearing the last quarter of the year, businesses that received the PPP loan are now starting to get emails from their lenders to began gathering their documents to apply for forgiveness.
Here are some points regarding our take on the timeline along with important dates to keep in mind.
Possibly delay applying for forgiveness
- With the tremendous administrative pressure on banks and the SBA to process millions of forgiveness applications. There have been numerous discussions and proposed bills in congress to automatically forgives PPP loans which are under $150,000.
- An example is Marco Rubios recent bill which for examples says that small businesses who borrowed less than $150,000 don’t need to provide substantiation of their spending. They need to attest that they followed the program requirements and keep records for three years in case the SBA wants to do an audit. Note this is a proposed bill not not a law yet.
- Based on these discussions we believe it is best to wait to see if Rubio’s bill or another bill is passed which will streamline the forgiveness process.
Possibly use the 24 week Covered Period
- When it is time to apply forgiveness, we believe most clients will benefit from the 24 week forgiveness period, because the PPP loan provides 10 weeks of payroll, which can easily be used within 24 weeks.
Review and possibly reinstate any reduced headcount by Dec 31st 2020.
- For full PPP forgiveness, your total employees on payroll should be the same as the total number employees you had on Feb 15 2020. If not you have until Dec 31st 2020 to bring your total employee count back up to that level and still receive full forgiveness.
- If you can’t bring the employee levels back up to Feb 15 2020 numbers there are six exemptions which can be applied.
For any employees during the … Covered Period
- 1. The Borrower made a good-faith, written offer to rehire an employee, which was rejected by the employee
- 2. Were fired for cause
- 3. Voluntarily resigned
- 4. Voluntarily requested and received a reduction of their hours
- 5. Borrower made a good faith, written offer to restore any reduction in hours at the same salary or wages, but the employee rejected
- 6. Borrower was unable to hire similarly qualified employees for unfilled positions by December 31, 2020
- • Any FTE reductions in these cases do not reduce the Borrower’s loan forgiveness.
Here’s to your best financial future ever!