Have you tried to see if you are eligible for a PPP (Paycheck Protection Program) loan? If so, you are not alone. Many small businesses have applied, and some have received PPP funds. There is one area that has me concerned, though….. “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”
How many applicants read that statement before applying? Most of us heard it was free money if used for an appropriate expense, namely, to keep employees on the payroll. So the restrictions state that 75% of the loan must be used for payroll in order for the loan to be forgiven. So what can the other 25% go toward? It can be used to pay rent, utilities, or mortgage interest. If you need help tracking the spending of the loan, our office has the ability to track it for you. Call us at 931-286-2654 for a free consultation.
An article by the National Law review addresses the economic uncertainty question. https://www.natlawreview.com/article/do-i-need-to-return-my-ppp-loan-sba-extends-safe-harbor-deadline-to-may-14. This article goes more in-depth about a safe harbor provision. In other words, the SBA has given people time to repay the loan with interest in order to not have to certify that current economic uncertainty makes the loan necessary.
There are many factors to the loan that need to be considered. If you’ve applied already, I’m sure you know what they are, such as 2.5 times your average payroll from a specified time period (depending on your company’s length of time in business or seasonal business factors). The amount that can be forgiven is what is used within eight weeks of receiving the loan. Certain payroll items count while part of the taxes don’t, etc. There is nothing simple about the loan application process, the tracking of payments made using the loan money to determine loan forgiveness, or the repayment process that will take place if funds aren’t used for their specified purpose. It’s enough to make your head spin (if it wasn’t already due to COVID-19, quarantine, changed IRS deadlines, social distancing, homeschooling, masks, and gloves at the grocery store, etc.)!
I, for one, am beginning to think there is a lot more work to do thanks to the extended tax deadline, overly complicated loan provisions, and general business advice needed during these strange times. If you feel the same way and want to lighten your already heavy load, contact us to see if we can help you. https://www.accountantcolumbiatnsuccentrix.com/. Whether you need a Schedule C done to substantiate the loan request or you need someone to track and be able to verify you have spent the money received on the right things, we are here to help. If you have gone through this process and realized your books are not in as good of shape as they should be, we’ve got you covered. We love being able to help others, and that is a main part of our mission. We’d be happy to partner with you to make sure we get through the difficult times to help grow your business tomorrow.