The SBA’s Paycheck Protection Program (PPP) continues to receive a lot of press coverage as additional organizations apply for the second batch of PPP loans and those who have obtained funding struggle to determine how to calculate the forgiveness portion. While there are still more questions than answers, below is what we know as of today.
The AICPA is recommending the 8-week covered period begin when stay-at-home orders are lifted, instead of when the funding is received. We are not sure how this fits with Governor Bullock’s phased reopening. This is non-authoritative and is simply the AICPA’s recommendation to the SBA. We’ll see what the SBA decides to do with all the AICPA’s recommendations included in the link below. We encourage you to clearly document how you are spending the PPP loan proceeds as your lending institution will request that documentation before approving any forgiveness.
Additionally, the SBA has an FAQ, last updated on April 29, 2020. Q #31, and supplemented by Q #37, indicate a borrower needs to take into account their current business activity and their ability to access other sources of liquidity sufficient to support their on-going operations in a manner that is not significantly detrimental to their business. If the borrower believes they do not have access to other sources of liquidity as defined in Q #31 of the FAQ, they should be prepared to demonstrate that to the SBA. If they do believe they have access to additional sources of liquidity, they have until May 7th to return the loan proceeds under the safe harbor indicated in Q #31. See the link below.
Finally, the SBA has announced they are going to review all PPP loans in excess of $2M and Q #39 of the FAQ indicates they will review other loans, as appropriate. Additional guidance on the implementation of the review procedures will be forthcoming.
If you have questions about the information contained in the links, our consultants would be happy to visit with you.