For businesses that have been impacted by COVID-19, now is a critical time to conserve cash, create emergency budgets, and do cash flow projections. We have been assisting our clients the last few weeks on securing PPP loan funding to help them through this critical time. Now that many of the loans are starting to fund, there are questions around getting the loans forgiven. See below for some free resources.
One complicating factor is the lack of SBA guidance on some of the details related to loan forgiveness. For a good overview of the looming questions, see Tony Nitti’s post on Forbes about the Ten Things We Need to Know About Paycheck Protection Program Loan Forgiveness.
One key challenge for employers right now is evaluating their employee numbers in respect to loan forgiveness. If a business’s average full time equivalent employees during each month of the eight weeks following loan disbursement is less that the average during Jan. 1 – Feb. 29, 2020 or Feb. 15 – June 30, 2019 (you get the choose the most beneficial period for your business), then the loan amount may be reduced.
If a business let go of employees between Feb 15 – April 27, 2020 due to COVID-19 issues, if the business rehires on or before June 30, 2020, the full time equivalent employee reduction discussed above may be waived. There is also a forgiveness reduction if wages are reduced below 25% of pre-crisis levels., this also could be waived if employees are rehired by June 30, 2020. We need additional guidance on some of the specifics from SBA.
Here are some resources based on what we presently know, we will attempt to update as we learn more:
*Please keep in mind the calculations are set as with the information we know as of the time this was posted. It is not guaranteed to be accurate as we are waiting on further updates from SBA.
Remember, you only have eight weeks from the time the PPP loan proceeds are disbursed to make strategic decisions on how to utilize the money if forgiveness of all or part of the funds is your end goal. The clock is ticking, do your due diligence now to avoid regrets later.
The forgiveness spreadsheet and applicable rules have some moving parts. For our current clients that received PPP proceeds, we will be reaching out to discuss our strategy for those funds. For businesses that are not already our client, we have a flat fee consulting package available, feel free to call or email for more details.