04/22/20 – PPP Tools

The Paycheck Protection Program has created a lot of uncertainty, frustration, and anticipation within the small business community. Despite the lack of guidance, many of our clients have been helped by the much-needed relief.

If you have already been approved, you are now dealing with the next round of confusion—how to spend the proceeds. We understand it is extremely frustrating that small businesses are forced to make decisions without any additional guidance since March. Unfortunately, one thing is becoming clearer—the amount forgiven may not be as much as originally thought. Due to the complex forgiveness calculation and multiple restrictions, 100 percent forgiveness may be unlikely, and you don’t want to put yourself in a position where you’ve spent all the money thinking it will be forgiven and now must pay it back. Until we receive clearer guidance, our updated recommendation is to spend the funds as you would have in the normal course of business while maintaining your workforce and keeping in mind the points listed below.

See our Loan Forgiveness Fact Sheet for an overview of what to do after funds are received. One item we would like to highlight is the FTE restriction. If businesses are not aware of it, this factor could reduce the amount forgiven. PPP loan forgiveness will be reduced if the average full-time equivalents (FTEs) decreases during the 8-week loan period compared to the lesser average FTEs during 2/15/19 – 6/30/19 or 1/1/20 – 2/29/20. See our PPP Impact of Employee Reduction calculator for a visual example and further explanations. You can also enter your own information to estimate the impact to your business.

If you haven’t applied yet, you may still have a chance since it looks like additional funds will be poured into this program. Late Tuesday afternoon (April 21st), the Senate passed legislation which provides an additional $310 billion for the PPP. The bill is expected to be signed into law later this week. Be sure to apply as soon as possible, as we anticipate this round will go even more quickly than the last as there are thousands of applications already in the queue.

We will continue monitoring the news multiples times a day for any updates as we have been. It has been very slow over the last week or two, but we anticipate more guidance to follow and will be sure to keep everyone apprised of what we learn.

Summary of Tools Linked Above:

Loan Forgiveness Fact Sheet
PPP Impact of Employee Reduction