Updates to the Paycheck Protection Program
In the age of COVID-19, we are all learning as we go. Here are some updates to the Paycheck Protection Program.
By Jenna deJong
On May 27, Biz 417 hosted a webinar with Corey Stone and Nathan Fitzgerald of BKD CPA & Advisors about to the U.S. Small Business Administration's (SBA) Paycheck Protection Program’s (PPP) loan forgiveness application. Since then, the SBA announced the cover period for the program was extended from eight weeks to 24 weeks and modified some rules and guidelines.
On the types of leases and rent payments that apply for loan forgiveness:
Corey Stone: On the leases, it’s real and personal property, so the copiers and vehicle leases, that all qualifies. The caveat is the lease had to be in place on February 15 and you had to have an actual lease. We’ve seen a few times [that people] have a self-rental on the real estate side, meaning they own the real estate in a different entity and that they operate the business out of a separate entity [and] they may or may not have had a written lease in place. You are going to have to supply a lease for the forgiveness application so those leases needed to have been in place prior to February 15.
Nathan Fitzgerald: It’s important to note from a documentation standpoint, that is one of the items that is going to be supplied with the loan forgiveness application. You’re going to have to provide a copy of the lease agreement and then to substantiate expenses, you’re also going to have to provide copies of receipts or canceled checks that demonstrate the amount of payments made over the cover period.
On the Economic Injury Disaster Loan (EIDL) advance amount referenced on the loan forgiveness application:
C.S.: The [Economic Injury Disaster Loan] program is a sore, sensitive subject to a lot of people. With the EIDL, originally, you could get a $10,000 advance by submitting an application and you would get funded within three days. If anybody went through that process, you know you did not get funded in three days, and depending on the employees that you have, they changed that to a $1,000 per employee, so you might have gotten less than $10,000. But the thing that they kept was whatever your advance amount was or your grant through the EIDL program, that amount will come off of the amount that’s forgiven through the PPP program. So if you qualify, let’s say you got a $100,000 loan in the PPP and you qualify for full forgiveness, you will get forgiven for $90,000. They will not forgive whatever advance you got through the EIDL program.
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