Next Steps for Paycheck Protection Program Loan Approvals
It’s been quite a tumultuous time, and we are happy to hear from clients who successfully applied and received loans through the Paycheck Protection Program (PPP).
We also want to thank the bankers and lenders who worked tirelessly helping small business owners who applied for a loan through the PPP. The prelude to the opening of the loan application process was filled with uncertainties, yet through perseverance and dedication to the financial well-being of small businesses, many workers will remain employed.
Take Appropriate Steps For Loan Forgiveness
For the businesses with approved loans, now is time to create a plan/budget to spend the monies from the loan correctly, and within the timeframe delegated by the terms of the loan. It is imperative to follow the Interim Final Rule published by the Small Business Administration to make certain most or all of your loan is forgiven. We recommend that you be diligent and document all expenditures. We can help you navigate these waters.
The Small Business Administration website states: “The loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll). Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees.
Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.”
Loan forgiveness will be based on a complex formula regarding full time employees and allowable costs.
Employee Retention Credit
For businesses that did not apply for a Paycheck Protection Plan Loan or did not qualify, you may still receive relief in the form of Employee Retention Credit under the CARES Act. This Employee Retention Credit applies to qualified wages paid after March 12, 2020, and before January 1, 2021. Our team at Wouch Maloney prepared an overview to help businesses understand the requirements and calculations used to determine Employee Retention Credits. To learn more, click here.
DISCLAIMER: The WM Daily Update COVID-19, COVID-19 Business Resources and COVID-19 Client News Alerts and other related communications are intended to provide general information on legislative COVID-19 relief measures as of the date of this communication and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.
