Howdy Business-Preneurs,
There are many nuances to the PPP Forgiveness documents which I will breakdown the ones that affect most of the small business operators that we serve. Please know that the PPP Flexibility Act of 2020 just passed the house late last week and will change some of the timelines on this program. We should know sometime this week if these changes will get through the Senate. The bill passed the congress 417 – 1 which creates a strong bi-partisan vote most likely pushing the Senate to act.
See the attached document stack that will assist with the process. These forms are directly from the SBA.
PLEASE NOTE THAT THIS INFORMATION IS INTENDED TO BE ASSISTANCE FOR YOUR USE. PLEASE WORK WITH YOUR ACCOUNTANT, LEGAL REPRESENTATION AND LENDER WHEN WORKING THROUGH THIS PROCESS
As for now, until another ACT is passed making changes to the existing rules:
1) Timeline to use monies for Payroll – Payroll dollars have (2) options – the ‘Covered Period’ or the ‘Alternative Payroll Covered Period’
1a) Covered Period (56-day) – Exactly 8 weeks from the day money was received in your bank from your PPP Lender – This does not include grant money.
1b) Alternative Payroll Covered Period – 8 weeks following the first day of the pay-cycle following your receipt in your bank of the funds from the PPP.
Option 1 is what we had all known was the plan and the addition of option 2 gives us more time to bring people back and get the biggest bang for our buck while trying to hit the minimum 75% payroll expectation.
See page 2 of the loan forgiveness application for a reminder of eligible payroll costs.
2) Timeline to use the monies for Eligible Non-Payroll costs – Eligible non-payroll costs must be paid during the covered period (56 days) or INCURRED during the covered period and paid on or before the next regular billing date (On time).
DO NOT CONFUSE THE FEB 15TH DATE. This is only the date that your rent, mortgage or other eligible costs must have been in place by, to qualify for forgiveness. This is not a date to retro your costs to.
FTE FACTOR – For most of the businesses that we work with, those receiving less than $2 million in PPP loan funds, there is a ‘safe harbor’ that will be allowed for this. See page 8 of the Loan forgiveness application documents.
This allows you to restore the FTE (Full time equivalent) levels by June 30th, even if it is outside of the covered or alternative covered periods.
PLEASE NOTE – IF YOU HAVE NOT SPENT THE MONEY, THE PORTION NOT SPENT WILL NEED TO BE RETURNED. REMEMBER, THIS IS FORGIVENESS THROUGH MONIES SPENT DURING THE COVERED PERIOD.
What do you need to prove your expenditures? See page 10 of the Loan Forgiveness Application.
Payroll: Be prepared to send payroll reports, 941s and state quarterly filings once available, payment receipts and or cancelled checks showing the amounts paid from the reports cleared by your bank.
FTE – documentation showing either the FTE average from 2-15-2019 through 6-30-2019 or 1-1–2020 through 2-29-2020. Borrowers choice. This can be shown on 941, State quarterly form and/or payroll reports.
Non-Payroll – Lease or Mortgage documents showing engagement prior to 2-15-2020. Utility statements showing engaged prior to 2-15-2020 and during the covered period.
THIS WILL BE 100% UP TO YOUR LENDER HOWEVER, YOU SHOULD BE MORE PREPARED SO IF THERE IS AN AUDIT, YOU WILL HAVE YOUR DOCUMENTATION READY~
Deadline to file for forgiveness – Application for forgiveness must be submitted by October 31st, 2020.
Work with your Lender to follow their filing instructions.
Please be on the lookout for additional information if the Flexibility act passes. This will change your urgency to spend drastically!
We hope that all of you have found new ways to create services and products relevant to the times and will prosper!
Be well and be kind!
David Mosberg
813-997-9756