Guidance concerning the Paycheck Protection Program (PPP) is continually changing as the program itself continues to evolve. Congress has passed, and the President has signed into law a $484 billion financial aid package that provides an additional $310 billion in funding to the Paycheck Protection Program (PPP), $75 billion for hospitals, $60 billion for small business economic injury disaster loans, and $25 billion to expand testing efforts.
PPP loans are administered by your bank, and the Treasury Department and Small Business Administration have provided this F.A.Q. that covers a wide range of topics.
We are here to help however you need us.
In the meantime, for the many companies that have already been approved for a PPP loan, the question shifts to how the loan can be eventually forgiven, and what steps you need to take now to make it happen. The following five points are a good place to start.
- If your business has been approved for a Paycheck Protection Program there is an 8-week period to calculate amounts eligible to be forgiven, beginning on the date the funds were deposited in the Company accounts.
- Eligible costs for forgiveness include:
- Payroll Costs (must be 75% or greater of the amount forgiven)
- Payments of mortgage interest
- Payments of rent
- Utility payments
- Forgiveness may be limited if any of the following occurs:
- A reduction in number of FTE employees, or
- Certain reductions in salary and wages to less than 75%
- We suggest keeping the PPP loan proceeds in a separate bank account if possible, to ensure they are used only for eligible expenses. The loan funds should not be used in a sweep account to reduce a debt obligation, as this is not a permitted use of the program funds.
- Finally, we suggest you prepare an 8-week forecast to estimate your forgiveness amount, and consult with your FHF professional to maximize the benefit of forgiveness.
One final reminder: Employers may also defer a portion of the payroll taxes incurred up until the date that the PPP loan is forgiven. Amounts deferred must be paid 50% by December 31, 2021 and 50% by December 31, 2022.