The Paycheck Protection Program (PPP) has helped millions of businesses cope with the consequences of the COVID-19 shutdown. But, like any large and complex program, the PPP has also generated a lot of questions, particularly regarding the records borrowers must keep to qualify for loan forgiveness.
The rules governing PPP loan forgiveness cover a broad range of operational and financial areas and involve numerous tax and financial reporting documents. Some of the rules also have changed over time, further complicating the recordkeeping requirements. (more…)
The Paycheck Protection Program Flexibility Act (H.R. 7010) was signed by the President on June 5, 2020. It provides businesses who received or will receive a Paycheck Protection Program loan with more flexibility to use their funds and have their loans forgiven.
We have outlined the major provisions of the Act below. Please reach out to our COVID-19 Resource Team for further guidance or if you have any questions. (more…)
New Developments – 8/4/20
Treasury Department released new FAQ’s for PPP Loan Forgiveness (Updated Aug. 4) confirming existing guidance and addressing a few open issues, including the meaning of “transportation utility expenses.”
(more…)
There has been much confusion due to a lack of detailed guidance related to a borrower’s requirement to “certify their need” for a PPP loan considering “other sources of liquidity”. Our previous blog post, SBA Announces Retro-Active Change to Paycheck Protection Loan Program, discussed this issue.
Earlier today, May 13, 2020, the SBA released FAQ #46 granting a safe harbor for many borrowers.
Under the “safe harbor,” all loans with an original amount of under $2 million will be deemed to have met the certification requirements in good faith. (more…)
The Paycheck Protection Program (PPP) launched in early April with little guidance provided to both borrowers and lenders. Many businesses acted quickly to determine their maximum loan amounts and submit their applications before funds would run out. Recently, there has been scrutiny related to certain recipients of the funds. In light of this, we want to ensure you are aware of the certifications that borrowers were attesting to on their loan applications. Specifically, borrowers were representing that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the applicant”. (more…)
New Developments – October 2020
FAQs on PPP Loan Forgiveness Updated October 13, 2020: The PPP loan forgiveness application forms (3508, 3508EZ, and 3508S) display an expiration date of 10/31/2020 in the upper-right corner, but this does not mean October 31, 2020 is the deadline for borrowers to apply for forgiveness. Borrowers may submit a loan forgiveness application any time before the maturity date of the loan, which is either two or five years from loan origination. However, if a borrower does not apply for loan forgiveness within 10 months after the last day of the borrower’s loan forgiveness covered period, loan payments are no longer deferred and the borrower must begin making payments on the loan. Note—these loan terms apply even if the original note signed by the borrower contain different terms that were applicable when the note was signed.
The SBA issued a new PPP Forgiveness Application Form 3508S and 3508S Instructions for those small businesses that secured a PPP loan of $50,000 or less. The most significant benefit of the new form is that employee reductions and salary reductions are no longer penalized. Additionally, the new form does not require submitting mathematical calculations on how the funds were spent, but it still requires the borrower to submit to the lender evidence (bank statements, invoices, etc) that the funds were properly spent. Interestingly, the SBA also reduced the lender’s responsibility to “verify” the evidence submitted.
- Because the maximum PPP loan amount is $50,000, this new loan forgiveness application will be most beneficial to self-employed, gig workers and businesses with just a few employees. There are approximately 3.57 million outstanding PPP loans of $50,000 or less, totaling approximately $62 billion of the $525 billion in PPP loans.
- There is still a possibility that the SBA/Congress may authorize a streamline forgiveness process for loans over $50K and under $150K.
- SBA just recently began approving PPP forgiveness applications and remitting forgiveness amounts to lenders last week on October 2, 2020.
- New PPP Loan Forgiveness Application Form 3508S
- New PPP Loan Forgiveness INSTRUCTIONS for Form 3508S
- New IFR for Loan Forgiveness of Small Loans
(more…)
New Developments – 10/13/20
FAQs on PPP Loan Forgiveness Updated October 13, 2020: The PPP loan forgiveness application forms (3508, 3508EZ, and 3508S) display an expiration date of 10/31/2020 in the upper-right corner, but this does not mean October 31, 2020 is the deadline for borrowers to apply for forgiveness. Borrowers may submit a loan forgiveness application any time before the maturity date of the loan, which is either two or five years from loan origination. However, if a borrower does not apply for loan forgiveness within 10 months after the last day of the borrower’s loan forgiveness covered period, loan payments are no longer deferred and the borrower must begin making payments on the loan. Note—these loan terms apply even if the original note signed by the borrower contain different terms that were applicable when the note was signed.
(more…)
New Developments – 11/20/20
PPP Update:
The IRS issued new FAQs to address eligibility to claim the Employee Retention Credit when an entity acquires a target Company that has participated in the PPP Loan program. Under provisions of the CARES Act, a PPP borrower cannot claim the Employee Retention Credit but special rules will apply for M&A activity.
The IRS reviewed its collection activities to see how it could provide relief for taxpayers who owe taxes but are struggling financially because of the pandemic. The agency is expanding taxpayer options for making payments and other ways to resolve tax debt.
(more…)
