Steps Private Schools Need to Take to Qualify for PPP Loan Forgiveness
May 28,2020
As the COVID-19 pandemic disrupted businesses around the country and Congress stepped in to provide financial aid through the Paycheck Protection Program (PPP), many private schools qualified for help. The attractiveness of the PPP – 100% loan forgiveness – puts the burden on recipients to meet the criteria for forgiveness, and applications must be done in the next three to six months. First, private school leaders need to ask their PPP lenders what is required to fulfill all requirements for loan forgiveness. Generally, criteria fall into three buckets: providing proper documentation, proving economic uncertainty and ensuring all the terms of the loan are met. A brief overview follows: 1. Providing proper documentation Schools must document how the loan was used for payroll costs (at least 75% of the loan amount must be used for this) and proof of the number of full-time equivalent staff on payroll. Documents can include payroll...
SBA Releases Guidance on Good Faith Certification
May 13,2020
Earlier today (May 13, 2020) the Small Business Administration (SBA) and Department of the Treasury released FAQ #46. The new FAQ provides clarification for businesses taking Paycheck Protection Program (PPP) loans, regardless of the loan size. Businesses taking a PPP loan with an original principal amount of less than $2 million will automatically be granted safe harbor relief with regard to the “good faith certification” it is required to provide. According to the FAQ, the “SBA has determined that this safe harbor is appropriate because borrowers with loans below this [$2 million] threshold are generally less likely to have had access to adequate sources of liquidity in the current economic environment than borrowers that obtained larger loans. This safe harbor will also promote economic certainty as PPP borrowers with more limited resources endeavor to retain and rehire employees.” Businesses taking loans greater than $2 million will be subject to a...
SBA Extends Safe Harbor Repayment Date
May 06,2020
If your business or nonprofit applied for a PPP loan prior to April 24, you were required to certify in your application that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” In a subsequently issued frequently asked questions document from the SBA, it was noted that borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business. Additionally, you were given a safe harbor repayment-in-full date of May 7, 2020 to be deemed by the SBA to have made that certification in good faith. Yesterday (May 5, 2020) the SBA extended the safe harbor repayment-in-full date to May 14, 2020. Borrowers do not need to apply for this extension. The SBA intends...
Guidance on Paycheck Protection Program Loan Forgiveness
Apr 20,2020
As of April 16, 2020, the funds allocated to the Paycheck Protection Program (PPP) had been exhausted, with an estimated 1.6 million loans extended. The businesses that applied for and obtained the loans now have to turn their attention towards ensuring they are meeting all the conditions of their loan if they hope to have the amount they borrowed forgiven. Conditions for full loan forgiveness One of the most attractive aspects of the PPP is the promise of up to 100% of loan forgiveness, with that forgiveness being tax free. To qualify, the following criteria from the Small Business Administration (SBA) must be met for the 8 weeks from the date the borrower receives its SBA loan funding: maintain full-time equivalent employee headcount and payroll costs as of February 15, 2020 (75% of the loan amount); meet obligations for mortgage interest payments, rent and utilities (the remaining 25% of the...
SBA Funds for PPP Loans Have Run Out: What’s Next?
Apr 16,2020
The Small Business Administration (SBA) announced today that the funds allocated from the CARES Act for the Paycheck Protection Program (PPP) have been exhausted. The program, which launched on April 3, 2020 has provided $349 billion in loans to small businesses. Treasury Secretary Steven Mnuchin announced last week that the administration is working with Congress to add more money to the PPP and that the parties are trying to reach an agreement on a package that will immediately increase funding. They are in talks today, April 16, 2020. With this in mind, if you plan to apply, we recommend you contact your commercial banker so that you can take the appropriate steps to be ready when additional funding is in place and applications are again accepted. We are following this news and will update you once we learn more. As always, please contact your Smith & Howard advisor if you...
Additional SBA Guidance on the Paycheck Protection Program
Apr 15,2020
Yesterday afternoon (April 14, 2020), the Small Business Administration provided guidance on two key areas of uncertainty in the Paycheck Protection Program (PPP). The guidance focuses on the self-employed, including partners/partnerships and applies to applications submitted under the PPP through June 30, 2020, or until funds made available for PPP are exhausted. Below is an overview of the Interim Final Rule; this is an overview and is not all-inclusive. Significant additional details are contained in the Interim Final Rule here and should be reviewed and discussed with your professional advisors. Self-employed and partners/partnerships Who Can File? If you were in operation on February 15, 2020, are an individual with self-employment income (independent contractor or a sole proprietor, for example), your principal place of residence is in the U.S. and you filed or will file a Form 1040 Schedule C for 2019, you are eligible for PPP. (1) Partners / partnerships:...
Additional Stimulus Being Planned For Small Businesses
Apr 08,2020
Treasury Secretary Steven Mnuchin assured small business owners in a CNBC interview this morning (April 8, 2020) that they will get the funding promised to them when the CARES Act (Coronavirus Aid, Relief and Economic Security Act) was passed and signed into law on March 27, 2020. “We want to assure everybody if you don’t get a loan this week, you’ll get a loan next week or the following week. The money will be there,” Secretary Mnuchin said on CNBC. Almost $350 billion of the stimulus package was set aside for small businesses through the Paycheck Protection Program (PPP). In his CNBC appearance, Secretary Mnuchin said, “I want to assure all small businesses out there: We will not run out of money. The president has asked us to go back to Congress. We hope they pass this tomorrow or Friday.” He had announced on Tuesday that President Trump had directed...
SBA and U.S. Department of the Treasury Issue Updated Guidance
Apr 03,2020
Updated 4/4/2020 with additional guidance provided in link to Treasury site below ALERT: On April 2, 2020, the U.S. Department of the Treasury provided updated information on the guidance surrounding the Paycheck Protection Program. The information below reflects those changes as we understand them; however, the situation is very fluid. We continue to read and discuss with others and will provide a full update as soon as possible. The updated guidance can be found here and includes: Top-line overview of the program Lender information Borrower information PPP Borrower Application Form (Updated 4/2/20) PPP Lender Application Form PPP New Lender Application Form (Federally Insured Depository Institutions, Federally Insured Credit Unions, Farm Credit System Institutions) Paycheck Protection Program – Interim Final Rule Paycheck Protection Program – Interim Final Rule on Affiliation Paycheck Protection Program – Applicable Affiliation Rules Find an eligible lender Frequently Asked Questions Please note that while the information still...

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