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PPP Update: The Latest Happenings

The PPP landscape continues to shift on a regular basis. The Payroll Protection Program Flexibility Act and the latest Revisions to the Interim Final Rule and Revisions to the Third and Sixth Interim Final Rule (no, I am not making this stuff up!) included various changes or clarifications. The most important are shown below along with our comments in italics:

  1. The last day a lender can get an SBA loan number under the PPP is June 30, 2020. Apply immediately if you have not already applied.
  2. The Covered Period has been extended from 8 weeks to 24 weeks. If you received your loan by June 5th you can still use the 8 week period. You may want to use the original 8 week period. If you use the 24 week period, any reduction in FTE’s or salaries over that full 24 weeks will likely count against your forgiveness amount.
  3. The rule requiring that a borrower use 75% of their forgiveness amount on payroll costs has been reduced to 60%. It is not a “cliff” meaning that you don’t get any forgiveness if you spend less than 60% on Payroll. There is a proportionate reduction.
  4. PPP borrowers can now take advantage of the provisions allowing deferral of 2020 employer Social Security taxes to 2021 and 2022. Not forgiveness, just deferral!
  5. Increased flexibility in avoiding FTE reduction…more time to fill (until December 31, 2020) and amnesty if you are unable to rehire or refill positions. Of course, the devil is in the details.
  6. There is new confusion about the ability to include in Payroll Costs health insurance premiums for S Corp shareholders, general partners and self-employed individuals. The latest guidance says you cannot include these costs since they are already included in their compensation. Expect further guidance on this…such costs ARE included in compensation on the W-2 at year end, but have not yet been included in compensation in the payroll records during the covered period.
  7. There is a newly issued EZ version of the Forgiveness Application form…borrowers will need to see if they meet the multi-part test to use the form.

We expect more clarification as time goes on. As always, please let us know if Fahrenheit Advisors can help you navigate through these turbulent times.

About the Author

Doug Jones provides fractional CFO and senior financial management services to small and midsize organizations. In addition to improving his clients’ accounting and finance operations, Doug frequently serves as the link between company owners and outside advisors including attorneys, CPAs, investment bankers, appraisers, and personal financial advisors. He is skilled in identifying and integrating the full range of financial and non-financial business issues in contract negotiations and resolution of business decisions.