Forgiveness, Repayment, Reapply – Next steps for businesses and the Paycheck Protection Program
By Brandon Allfrey, Brandona@squire.com
The Paycheck Protection Program (PPP) has been a constant discussion since the CARES Act was passed in March 2020. The purpose of the program was to provide businesses with money to keep employees on their payrolls keeping staff paid and the economy steady as COVID-19 impacted our day to day lives. The program has been full of news, updates, confusion, and relief. Whether you have received PPP funds, returned PPP funds based on changing guidance, or wondered if you can or should still apply, important details are becoming clear for the next steps of PPP.
This past week, the Paycheck Protection Program Flexibility Act (PPPFA) was passed to help businesses better meet the guidelines to achieve forgiveness of the loan through changes in the guidelines. The changes are viewed as business-friendly and help to achieve the intent of the CARES Act. One of the important clarifications made lengthened the covered period of measurement for loan forgiveness from 8 weeks to 24 weeks. The direct result is that the forgiveness application process does not something that needs to be immediately rushed into. It gives businesses time to determine that they can meet the forgiveness rules, which have been modified with extended dates through December 31, 2020. The current PPP Loan Forgiveness Application from the SBA has not been revised to reflect the updated law changes. For those businesses approaching the end of their 8-week covered period from loan origination date, they will want to wait for the new application to analyze their forgiveness amounts and determine their own next steps.
During what seemed to be constantly changing guidelines related to PPP Loans, many companies who applied and received funds chose to repay those loans immediately due to uncertain interpretations of qualifying for the loan. Some companies have since found in subsequent guidelines that they meet the PPP loan qualifications. Questions have arisen regarding these businesses reapplying for the PPP based on subsequent guidance. The SBA has not directly addressed how they are handling this situation publicly, so businesses wondering about PPP funding after previously returning funds should consult directly with their lenders to work directly with SBA. However, the deadline for all applications for PPP funding is June 30, 2020.
Some businesses were not able to obtain funding at the time of their application due to funding limits being reached. Additionally, businesses may not have applied not knowing they would need the funds with the continued uncertainty of the economy. As conditions have changed, businesses may still be seeking for help that they originally didn’t think they needed. The SBA is reporting that, as of June 10, there is still $150B of funding available for businesses to apply. The application deadline is June 30, 2020 and must be done through lenders.
If you need assistance in the PPP forgiveness, repayment evaluation, or PPP application processes, visit www.squirecares.com. Here you will also find more information regarding funding, business operations, and tools related to running your business during the COVID-19 pandemic.