Payback Protection Program Update: The Road to Forgiveness
Guidance concerning the Paycheck Protection Program (PPP) is continually changing as the program itself continues to evolve. As of this morning, Congress and the White House were close to a deal to pump an additional $310 billion into the CARES Act’s massive relief measure for small businesses.
In the meantime, for the many companies that have already been approved for a PPP loan, the question shifts to how the loan can be eventually forgiven, and what steps you need to take now to make it happen. The following five points are a good place to start.
- If your business has been approved for a Paycheck Protection Program there is an 8-week period to calculate amounts eligible to be forgiven, beginning on the date the funds were deposited in the Company accounts.
- Eligible costs for forgiveness include:
Payroll Costs (must be 75% or greater of the amount forgiven)
Payments of mortgage interest
Payments of rent
- Forgiveness may be limited if there is any of the following:
A reduction in number of FTE employees, or
Certain reductions in salary and wages to less than 75%
- We suggest keeping the PPP loan proceeds in a separate bank account if possible to ensure they are used only for eligible expenses. The loan funds should not be used in a sweep account to reduce a debt obligation as this is not a permitted use of the program funds.
- Finally, we suggest you prepare an 8-week forecast to estimate your forgiveness amount, and consult with your Weiss professional to maximize the benefit of forgiveness.
One final reminder: Employers may also defer a portion of the payroll taxes incurred up until the date that the PPP loan is forgiven. Amounts deferred will be repaid 50% by December 31, 2021 and 50% by December 31, 2022.
For timely updates and advice about pandemic-related developments, visit the COVID-19 News and Information Center on our website.
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