July 31, 2020
Paycheck Protection Program (PPP) - Application deadline extended until August 8th

This message is pertinent to all business owners including self-employed individuals.  Please take the time to read this message which highlights some of the recent updates to the Paycheck Protection Program (PPP).  The PPP is an SBA sponsored loan program that was funded by the CARES Act back in March 2020.  The purpose of the PPP program is to provide small businesses, which have been negatively impacted by the COVID-19 pandemic, with forgivable loans that can be used to fund payroll (including compensation replacement for the self-employed), rent, utilities and mortgage interest.  If your business has not yet applied for a PPP loan, we strongly believe this is something you should consider.
  • PPP application deadline has been extended to August 8, 2020.  You must apply through a local SBA approved lender.  If you need a lender referral, please ask Jennifer.
  • There is over $100 billion in PPP funding still available (average PPP loan size = $104K)
  • PPP loan forgiveness application process is expected to get easier - There is bi-partisan support to streamline the PPP loan forgiveness process.  The American Institute of CPAs (AICPA) projects there will be a significantly streamlined forgiveness process for PPP loans of up to $100K or $150K.  This streamlined process for smaller loans is expected to consist solely of borrower certifications that the PPP loan proceeds were used for the allowed purposes; no supporting documentation such as payroll reports, check stubs or bills would be required.
  • The PPP Flexibility Act allows borrowers the choice of an 8-week or a 24-week covered period. The option of this longer covered period will help businesses that have been physically shut down due to the pandemic additional time to rehire workers.
  • In order to achieve maximum loan forgiveness ALL self-employed borrowers should elect the 24-week covered period.
  • Existing PPP borrowers should NOT rush to submit PPP loan forgiveness applications; there is plenty of time and the rules will likely change.  The PPP loan forgiveness application and instructions have not yet been updated to reflect the August 8th funding extension date and the SBA has announced it will not be prepared to accept PPP loan forgiveness applications before August 10th.  The SBA is expected to issue 25-30 more FAQs but is holding off for now as additional legislation is highly possible before Congress begins its summer recess on August 8th.
  • If a borrower's PPP loan is not fully forgiven, the balance becomes a 1% loan that is generally payable over 5 years.  Thus, this is a very inexpensive form of borrowing.
  • While the IRS has taken a position that a taxpayer cannot deduct expenses paid with a forgiven PPP loan, the AICPA does NOT believe that was the intention of our lawmakers.  Many believe this issue will be addressed in the next COVID-19 relief legislation.  Stay tuned...
  • The $1 trillion Republican stimulus package that is currently being proposed by Congress includes a second round of PPP funding.  It is believed this second round will include an additional $90 billion of PPP funding and will be targeted to businesses with less than 300 employees or businesses with a greater than 50% decline in revenue.  It is also anticipated that businesses that have already received a PPP loan in round one will be eligible to apply for a second PPP loan in round two.

While is remains to be seen whether the Democrats and Republicans will come to a compromise before their August 8th recess, it is highly probably there will be additional stimulus programs enacted before the 2020 presidential election.

Should you have questions regarding the PPP, please reach out to Jennifer.  Wishing you continued health and safety during these challenging times.

The Team at Sechrest & Bloom, LLC