MPL General Counsel Corner – PPP forgiveness tent has definitely expanded

There have been numerous updates related to the PPP forgiveness application.  Importantly, a new EZ version and revised full version were posted with instructions.  In my reading of the details, the PPP forgiveness tent has definitely expanded.

Rather than reinvent the wheel, I thought that Trout CPA put out an excellent overview and video highlighting the key points (see below).  Also, if interested, an interim final rule (creatively named the Interim Final Rule on Revisions to the Third and Sixth Interim Final Rules) was also published on 6/17 explaining the new forgiveness details.

The EZ version of the forgiveness application applies to borrowers that:

  • Are self-employed and have no employees; or
  • Did not reduce the salaries or wages of their employees by more than 25%, and did not reduce the number or hours of their employees; or
  • Experienced reductions in business activity as a result of health directives related to COVID-19 and did not reduce the salaries or wages of their employees by more than 25%.

The new and revised full version of the forgiveness application has the following updates:

  • The employee forgivable pay cap is expanded to $46,154 if 24 weeks is selected and remains at $15,385 if 8 weeks is selected.
  • Owner compensation is expanded up to $20,833 (or 2.5 months’ worth of 2019 pay if less) if 24 weeks is selected and remains at $15,385 if 8 weeks is selected.
  • New FTE reduction exceptions and safe harbors from the PPP Flexibility Act have been added.
  • New clarification that health insurance paid during the covered period does not qualify for S-corporation owners.

Links for applications, instructions, and worksheets:

Video Overview of New Applications by Trout CPA Tax Manager Dan Chodan, CPA
EZ Loan Forgiveness Application
EZ Loan Forgiveness Instructions
EZ Loan Forgiveness Application Worksheet
Loan Forgiveness Application
Loan Forgiveness Instructions
Loan Forgiveness Application Worksheet

Here are some other things that may be important or relevant for you:

Finally, I know I was going to send these out on Fridays.  However, I felt the two updates this week were important for everyone to know given it was updates to the forgiveness portion of the PPP.  Barring another major announcement, I will get back on the Friday schedule next week.

Please see all of our prior updates at the this link or if you would like to be added to our email list, please click here

As always, please don’t hesitate to email myself (jsanders@mpl-law.com), Andy Miller (amiller@mpl-law.com), Christian Miller (cmiller@mpl-law.com) or anyone in our office with questions or comments.  

MPL General Counsel Corner – States aren’t the only thing reopening – Welcome back EIDL

Yesterday, the EIDL application portal opened up for all small businesses again.  Below are the key points about an EIDL.  The highlighted section is the most common question I have received regarding the EIDL versus the PPP.

  • Who is eligible:  Businesses, Coops, ESOPs and tribal small businesses with < 500 employees; sole proprietor, independent contractors, most private non-profits
  • The max loan is $2m at a 3.75% for businesses and 2.75% for non-profits with up to a 30 year term
  • Up to $200k can be approved with a personal guarantee
  • Approval can be based on a credit score and no first-year tax returns are required
  • No collateral required for loans of <$25k
  • Borrowers must allow the SBA to review their tax records
  • You are eligible to apply for up to a $10k advance under the EIDL, which is a grant and does not have to be repaid.  The amount of the advance will directly reduce your forgiveness amount under the PPP dollar for dollar.  The balance of the EIDL does not impact the forgivable amount under the PPP.
  • EIDL funds cannot be used for the same purpose as a PPP loan.

Here are some other things that may be important or relevant for you:

Please see all of our prior updates at the this link or if you would like to be added to our email list, please click here

As always, please don’t hesitate to email myself (jsanders@mpl-law.com), Andy Miller (amiller@mpl-law.com), Christian Miller (cmiller@mpl-law.com) or anyone in our office with questions or comments.  

MPL General Counsel Corner – Going Green – Boogity, Boogity, Boogity, Let’s Go Racing!

Its been a week to digest the PPP Flex Act that was signed into law by the President.  The Dept. of Treasury recently issued an updated Interim Final Rule to reflect the changes.  As a reminder, here are the major items that are different than the original PPP rules:

  1. Covered Period for PPP Loans now runs until December 31, 2020, versus the prior June 30, 2020.   You still must apply by June 30th.
  2. Maturity Date for PPP loans is now 5 years for loans made after June 5, 2020.  If you have a PPP loan that was issued prior to this date, you and your lender have to mutually agree to extend the term from two years to five years.
  3. Loan forgiveness coverage period can be 24 weeks, versus the prior eight weeks.
  4. Deferral period for the PPP principal and interest payment is now 10 months after the end of your loan forgiveness period, versus 6 months prior.  Interest continues to accrue during the deferral period.
  5. To be eligible for full forgiveness, 60% of the loan must be used for eligible payroll costs.  If you do not reach this threshold, there are proportionate amounts that will still be forgiven in keeping with the prior rules.
  6. EIDL loans that have been used for payroll must be refinanced under the PPP loan.  Also, if you received any portion of the $10k advance, the amount received is deducted from your approved PPP forgiveness amount (this is the only amount that impacts your PPP forgiveness amount; the remainder of an EIDL is a separate loan).

Stay tuned for more information to come out as the updated PPP rules are applied.

Other than that, here in PA more counties went to the green phase today, including York County.  I don’t know why, but when heard we were going green, I kept hearing Darrell Waltrip’s famous saying for the start of a NASCAR race:

Boogity, Boogity, Boogity, Lets Go Racing.

Have a great weekend everyone and we will talk to you next week.

Here are some other things that may be important or relevant for you:

Please see all of our prior updates at the this link or if you would like to be added to our email list, please click here

As always, please don’t hesitate to email myself (jsanders@mpl-law.com), Andy Miller (amiller@mpl-law.com), Christian Miller (cmiller@mpl-law.com) or anyone in our office with questions or comments.