Understandably, everyone is on pins and needles dealing with 2020 events that seem to pour into our consciousness every waking hour. Concerning the Payroll Protection Program (PPP), rumors have been flying about potential legislative modifications. You hear them, we hear them. We want to provide a glimpse into what MIGHT happen, should legislation be passed in coming days.
Senator Marco Rubio (R-FL) chairs the U.S. Committee on Small Business & Entrepreneurship, and has introduced a bill entitled “Continuing Small Business Recovery and Payroll Program Protection Act.” We want to emphasize that this is pending legislation, and we cannot in any way predict its successful passing. It is important, however, to know what might happen. The proposed legislation:
- May restart the PPP loan applications and provide additional funding to more specific borrowers.
- May restrict the PPP loan maximum to $2,000,000 (is currently $10,000,000).
- Could expand “non-payroll” eligible expenses to include “operational” expenses – software subscriptions, supplies, COVID-19-related costs like PPEs, and property damages from vandalism and looting.
- Might allow borrowers with loan forgiveness of less than $150,000 to apply for the forgiveness with an attestation that the PPP was spent appropriately; borrowers with loans of more than $150,000 but less than $2,000,000 would have to certify as to the correctness of the use of the loan proceeds, representing that the documents to support that certification are available in the case of an audit (much the same as filing your tax return and “certifying” that the entries are complete, correct and comprehensive).
- Borrowers may be able to apply for more PPP funds, either as a second loan, or an addition to the initial loan which was funded incorrectly.
- Might add some new rules for farmers and ranchers, expanding their ability to borrow.
- Might make the PPP process friendlier to seasonal employers, but the maximum loan would be $1,000,000 instead of $2,000,000.
Rubio’s proposal might indeed be included with a larger bill, but the legislative environment is somewhat chaotic, making any prediction about its success impossible.
We at ATLAS are also aware that some of you with existing PPP loans have been contacted by your lenders, asking that you complete the loan forgiveness application. We suggest that you respectfully wait with the forgiveness application, at least for the time being. While some of you – many of you – may already know that you qualify for complete forgiveness, you may well be spending time and money to complete the loan forgiveness application, when in the days ahead the process may be streamlined to a signature.
In the meantime, we encourage you to find all your ducks and put them, military-style, into a row. Here’s what you should begin gathering (for the relevant “covered” period – 24 weeks beginning on your funding date):
- Payroll reports (self- or third-party- prepared) with bank statements to support the payment of the payroll and related taxes, related payroll tax forms, and documentation of hours worked from one of the following reference periods (2/15/2019-6/30/2019 OR 1/1/2020-2/29/2020 for most businesses, but 12 consecutive weeks from 5/1/2019-9/15/2019 for seasonal businesses).
- Documents supporting the payment of health benefits paid on behalf of employees during the “covered” period
- Documents supporting retirement contributions paid on behalf of employees during the “covered” period
- For non-payroll costs:
- Copy of your current lease agreement
- Rent payments – cancelled checks or bank records reflecting the payments during the “covered” period
- Mortgage interest expense during the covered period, including the loan amortization schedule and cancelled checks
- Utility bills and proof of payment for utility bills incurred or paid during the “covered” period
Our ATLAS team will continue to monitor the situation and advise as soon as we have more clarity. We know this has been an exhausting and overwhelming year. We are here to help provide you assistance to see your way forward.
As always, if you need help or clarification, please do not hesitate to contact us here.
Stay safe and stay well.
Onward. Upward. Beyond.
Your ATLAS Team