What you need to know about applying for PPP and loan forgiveness

Time is running out on the Paycheck Protection Program (PPP). June 30 is the deadline for small businesses to apply for forgivable PPP loans. Even for companies that are now reopening, PPP is still available as a source of Covid-19 financial relief.

Initially riddled with confusing vagueness and overly restrictive rules, PPP has improved since the program’s launch. The US Small Business Administration. USA (SBA) made many orientation updates, and earlier this month, Congress amended the law.

However, little time remains to apply as companies focus on meeting strict reopening requirements under the guidance of coronavirus by state authorities. Additionally, with high-profile negative publicity for some companies that received forgivable PPP loans, in addition to government investigations and criminal charges for PPP abuses, some small business owners have been cautious about applying for this potentially valuable crisis aid.

To find out what busy small business owners and nonprofit CEOs should consider now, before submitting the application before the June 30 deadline, I turned to Greg Reibman for a quick overview of the PPP loans. As president of the Newton-Needham Regional Chamber in Massachusetts, he routinely answers questions about the PPP of member companies.

1. What is the attitude of small local businesses towards PPP and how has it changed?

The PPP launch was very frustrating. The rules were vague. We are now living up to the SBA’s 18 “interim final rules,” an indication of how often the feds have had to update their guidance. Finding a bank from the beginning was very difficult. In the end, our local community banks stepped forward and helped clients of larger banks who were having trouble communicating.

Our chamber has more than 900 member companies, primarily in the western suburbs of Boston. Most were qualified for PPP. In the end, I only heard from half a dozen or so that they couldn’t get the loan, and generally that was for extenuating circumstances.

2. Can I apply for a PPP loan?

The application deadline is June 30, but I understand that some banks have already closed their application portals, so anyone who wants to apply must do so as soon as possible. Don’t wait until the last days.

The SBA announced on June 19 that it has revived its online tool Lender Match to help underserved and disadvantaged small businesses and nonprofits. In its press release, the SBA described the tool as a resource for “small businesses affected by a pandemic that have not applied for or received an approved PPP loan to connect with lenders.”

3. Is there money left for the program? If so, is there a list of banks or websites that still want apps?

According to the latest SBA data, as of June 20, more than 4,666,560 loans had been made. The good news is that as of that day, the PPP still had nearly $ 130 billion in unallocated funds.

Unused funds will be sent back to the United States Treasury unless Congress approves another use. Last week, Democratic Senators Chris Coons of Delaware and Jeanne Shaheen of New Hampshire proposed extending the PPP deadline to December 30 or more. But no one thinking about running should count on Congress to change the application deadline. Apply now.

4. If you don’t want to pay an attorney or accountant to do initial applicationGiven the rush for the June 30 deadline, how hard is it to understand? Is there a way to get free guidance on what to do?

From what I heard, most small businesses have been able to apply only with the help of a local banker, but it will really depend on their circumstances, how long they have, and their ability to unearth some financial history. The most complicated part may be after getting the loan. You must make sure you follow the rules in order to exercise the functions of forgiveness. This would mean that you would not have to return anything or most.

Check with your local SBA office for a list of partners who offer free advice. Or search online for one of the many webinars or how-to articles submitted by law firms, accounting firms, and others. Just be sure to select a credible font.

5. If a small business is reopening, can you qualify for a PPP loan?

Yes. You don’t need to close your business to apply.

6. Are these SBA loans really forgivable and tax free? If you qualify for loan forgiveness, don’t you need to pay it back?

Yes, as long as you carefully follow the spending guidelines and restrictions.

7. The rules appear to have been loosened since the PPP was announced. What is different now in how and when a business can spend the money to make the loan forgivable?

This is truly refreshing news. Earlier this month, the House of Representatives and the Senate overwhelmingly agreed to review the program with the Check Protection Program Flexibility Act. This law reduced the portion of the PPP loan that must be spent on payroll to 75% from 75%. The rest must be spent on rent, utilities, and other business-related expenses.

They also did the following:

  • Extend the amount of time you can use the funds from 8 to 24 weeks while still being eligible for loan forgiveness.
  • Extend the time that new PPP loans must be repaid from 2 to 5 years if the amount provided does not become a grant (i.e., the forgivable portion of the loan)
  • Loan forgiveness is still possible if former employees will not return to work, or if earnings in December 2020 are below February 2020 levels.
  • Postponement of payroll taxes is now also allowed

8. Can companies use PPP loan funds only for payroll?

No. Up to 40% can now be spent on non-payroll expenses.

9. Will the SBA, the Treasury Department, or the IRS publish a list of all companies, nonprofits, and educational institutions that have received PPP loans in the midst of the Covid-19 crisis? If so, should a company be concerned about negative publicity?

The SBA and Treasury announced June 19 that they would release the names of companies that received taxpayer-funded PPP loans of more than $ 150,000. Borrowers who borrowed less than $ 150,000 (more than 75% of all loans) will not have their identity disclosed.

[FormoreinformationonhowtoprotectyourbusinessfromnegativeadvertisingabouttakingoutaPPPloanforfinancialaidfromcoronaviruspleaseseemyForbescomarticles[FormoreaboutprotectingyourbusinessfromnegativepublicityabouttakingaPPPloanforcoronavirusfin[ParaobtenermásinformaciónsobrecómoprotegersunegociodelapublicidadnegativaacercadetomarunpréstamoPPPparaaliviofinancierodecoronavirusconsultemisartículosdeForbescom[FormoreaboutprotectingyourbusinessfromnegativepublicityabouttakingaPPPloanforcoronavirusfinancialreliefseemyForbescomarticlesPaycheck Protection Loan Backlash: How To Defend Your Company’s Reputation And Keep The Shocks From Shaking and The federal PPP loan fraud charges are here to remind you that these loans are not “free money”.]

10. I heard that after obtaining the loan funds, the request For loan forgiveness it is much longer and more challenging. Is there a short way to this?

There are two new applications that you can choose to complete. One is a “borrower friendly” application and a separate form, referred to by the SBA as the “EZ version” for borrowers who meet any of the following requirements:

  • They are self-employed and have no employees; OR
  • It did not reduce the wages or salaries of its employees by more than 25%, and it did not reduce the number or hours of its employees; OR
  • You experienced reductions in business activity as a result of Covid-19 related health directives, and you did not reduce your employees’ wages or salaries by more than 25%

11. Do I need to rehire all my employees for the loan to be forgivable? Can I still fire or give bonuses to those who work for me?

You don’t need to rehire every employee you laid off, or restrict your layoff or reward to employees, which is confirmed in the recent SBA guidance.

12. Can a non-profit or charity apply for PPP? Would it be a forgivable loan? Are the rules different?

Yes, 501 (c) (3) nonprofits are eligible, following the same rules.

13. How is the Emergency Advancement of the Economic Disaster Injury Loan (EIDL) different from the PPP?

PPP loan recipients are also eligible to participate in the recently reopened EIDL program, as long as the two loans are for different purposes (so the EIDL is not used for payroll). While you must apply for a PPP loan through an SBA approved lender, you must apply for EIDL directly through the SBA. You will hear directly from the SBA via email.

Homeowners and nonprofits are eligible for EIDL. This is great since the owners could not request PPP.