On Friday, May 22, 2020, the Small Business Administration issued a pair of documents containing much-needed guidance for borrowers and lenders participating in the SBA’s Paycheck Protection Program (PPP).
UPDATE: The SBA has extended the grace period to May 14, 2020. All other aspects remain unchanged.
The Paycheck Protection Program (PPP) is one of the most influential aspects of the CARES Act legislation enacted by the U.S. Congress to combat the economic effects of the COVID-19 pandemic. In two massive tranches of funding, the PPP pumped nearly $660 billion into the economy and, through the Small Business Administration (SBA), down into the hands of small businesses that are and remain in desperate need.
This article was co-authored by Collin Kanelakos, Partner, Assurance Services.
So, you’ve submitted your SBA Paycheck Protection Program (PPP) application and you might have even received your loan proceeds, but important work still remains. It is critical for you to closely manage and account for your PPP loan proceeds, not just for cash flow purposes but for accounting purposes in order to apply for your PPP loan forgiveness. The amount of documentation you will ultimately need for the forgiveness component of this loan will be substantial, so get your process in place now to shorten the lag of this ultimate forgiveness.
Information continues to come from the U.S. Treasury and the U.S. Small Business Administration about much-needed relief for American small businesses. For a refresher on the key loan options available for small businesses, please see LGT’s analysis of the Paycheck Protection Program (PPP) here, the Emergency Economic Injury Disaster Loan (EIDL) program here, and a comparison of the two types of loans here. Applications for EIDLs are already available online for download, and now so is the PPP Application Form! Before diving in to complete the application, however, take a few minutes to get familiar with some key provisions of the PPP application and process below, and don’t forget to download and review the full PPP Information Sheet from the U.S. Treasury.
When the Coronavirus Aid, Relief, and Economic Security (CARES) Act (the Act), became law on March 27, 2020, it brought with it large-scale programs aimed at bolstering small businesses across the nation.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act contains immediate payroll tax relief for certain employers. Delaying payment of certain employer payroll taxes is not available to employers who receive debt forgiveness for a loan received under the CARES Act Paycheck Protection Program.
On Friday, March 27th, the Coronavirus Aid, Relief, and Economic Security (CARES) Act (the Act) passed the U.S. House of Representatives and was signed into law by the president.
The CARES Act is possibly the most sweeping economic stimulus package ever and is an ambitious and much-needed shot in the arm to a flagging economy hobbled by the coronavirus.