12.16.2020 UPDATEPPP Loan Update
We are continuing to monitor the PPP Loan information. The SBA has released the loan forgiveness application. While changes may still be coming with this program and individual banks may have slight variations on the process, we wanted to share what we know at this moment and make you aware of a few notable items.
Paid during the covered period; or
Incurred during the covered period and paid on or before the next regular billing date, even if the billing date is after the covered period.
We are continuing to monitor possible changes to the PPP Loan. Thursday the House passed a bill that would change many provisions of the program. A few items that could change are:
The text of the House bill can be found at: https://www.congress.gov/bill/116th-congress/house-bill/7010/text
We will continue to monitor the progress of possible changes and we will communicate further changes as needed.
Please find below a calculator to help in determining the possible forgiveness amount of the Paycheck Protection Program. Please note this a simplified version of a calculation we are working on to better answer detailed questions you may have about determining the forgivable amount of this program. If you have questions please contact our office or email firstname.lastname@example.org.
Paycheck Protection Program Calculator
Below is an article from Forbes which outlines many of the unanswered questions that we have been internally debating associated with the paycheck protection program.
Please be aware that the SBA has released a version 4 of the Paycheck Protection Program loan application. Click on the link for an instructional sheet that will walk everyone through the 5 things that are different about the new form compared to version 3.
90% of the banks that we have spoken to are requiring an online application and not a paper application. In light of this information, we prepared the above-mentioned instructional sheet to help clients enter the new information in addition to the application that we have already prepared for you. We hope this will be a guide for you to enter the information yourselves in an efficient manner.
For those that have a banking institution that will require paper applications, we will transfer information to the new form for you. However, we see a technical problem with one of the new items on the latest version. We anticipate that there will be yet another version. Please stay tuned.
Please let us know via email (email@example.com) your bank’s application process: online submission or paper application.
We hope that you are doing well and have contacted your bank regarding your intent to submit an SBA 7a loan application under the Paycheck Protection Program of the recently enacted CARES law. We wanted to follow-up about some additional specifics of this particular SBA 7a loan application and what we have heard from the banking community.
Approved SBA 7(a) Loan Application
Here is a PDF illustration of how to calculate the applicable maximum loan amount. The amount is based on 250% of the average monthly payroll costs. We are still uncertain if that calculation will be based on the 2019 cost figures, as has been suggested by many banks and the US Chamber of Commerce. The actual law says the last 12 month period, which would currently be the period from April 2019 to March 2020. We are recommending that the maximum loan amount be calculated under both methods until there is clear guidance. In our preliminary calculations, there have not been any large differences in these two calculations. The 2019 cost figures are the easier calculation for sure.
We are here to help you in this unprecedented time. Please let us know if you need our assistance in any of the following. You can send us an email indicating which level of assistance you would like us to provide for your business. (firstname.lastname@example.org)
We of course are here to help you and your organization through all of this. As you are likely already aware we have a team of experts who have been at the front line of this for the past three weeks. Please do not hesitate to reach out to us with any additional questions as it relates to this or any other relief measures that have recently been enacted.
US Chamber of Commerce Sm. Business Guide & Checklist
NAGGL Provisions of the CARES ACT applicable to the 7(a) loan program
We want to reach out about the CARES Act law that was passed on Friday.
One of the very favorable provisions of the law relates to the Forgivable SBA 7(a) loan. This loan is available for companies with less than 500 employees. The forgivable portion of the loan covers an eight-week period of eligible costs. Costs include payroll and independent contractor payments, capped at $100,000 per individual and pro-rated for the covered eight weeks; interest on mortgage obligations; rent obligation; and utilities.
The maximum loan amount is determined based upon your last 12 months average monthly payroll multiplied times 2.5, with an overall cap of $10,000,000.
Please note that there are provisions that affect the amount of the loan that is forgiven if there is a reduction of employees. If that is an immediate concern, please give us a call to discuss this more fully.
Another key element of the CARES Act Forgivable SBA 7(a) loan is that for the forgiven portion of the loan, that forgiveness amount will not be taxable income.
If you are interested in taking advantage of this, we strongly encourage you to reach out to your bank and start the application process immediately. For details of this loan program, please follow the link provided below.
The Small Business Owner's Guide to the CARES Act
If there are any additional questions, or if we can help in any of this, please do not hesitate to give us a call.