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We know that the PPP Flexibility Act was made law June 5. What does this mean for your business?
Hey all,

We know that the PPP Flexibility Act was made law June 5.  ICYMI, this means that:

  • The covered period is now 24 weeks.  Borrowers that received the PPP loan before June 5 can elect the 8- or 24-week period.
  • You must now spend at least 60% (not 75%) of total eligible costs on payroll.
  • The safe harbor date is now December 31, 2020.
  • If you’ve tried to rehire people back to work and couldn’t, now you will also not be penalized if you couldn’t find qualified replacements or social distancing and federal health guidance prevented you from doing so.
  • The repayment period has been extended to 5 years for loans made on or after June 5 (or for borrowers and lenders who agree upon the extension).
  • Businesses can now defer the payment of the employer’s share of Social Security payroll taxes (6.2%) until 2021 when 50% must be paid and in 2022 when the remaining 50% will be due.

Like we had anticipated, a revised loan application and an EZ version have been released by the SBA.  The EZ loan application is for the self-employed who have no employees, borrowers who did not reduce salaries or wages by more than 25% and did not reduce FTE’s, or borrowers that experienced reductions in business activity because of health directives related to COVID-19 and did not reduce salaries or wages by more than 25%.  The EZ version is the simpler of the two.

You’ll want to note a few additional things:

  • Schedule C and Schedule F filers can receive forgiveness of (2.5/12) x 2019 net profit. This is contrary to what we initially thought (24/52), but this does seem fair.  We have to remember that the original intention of the PPP was to keep people on payroll, not just to hand out free money.  The extended 24-week period will still help those filers with payroll and other eligible costs.
  • If you have not already received the PPP loan, you still can apply but have only until June 30 and limited lenders are accepting applications.  You can also go to the MVEDC website to apply.

Although the forgiveness applications are now available, just be sure you have all of your ducks in a row before submitting.  Check with your lender on exactly what documents you’ll need to provide.  Make sure your calculations are correct. Utilize your time to make solid decisions and consult with your accountant, then give your lender time to process everything.

If you should need help throughout this process, please feel free to reach out to us and receive our Free 7-Step Process for PPP Loan Forgiveness!

Thank you,

Tim
 
 
 

Tim Petrey, CPA, CGMA
Managing Partner
HD Davis CPAs,LLC
330.759.8522 ext. 103









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