Up to date Paycheck Safety Program (PPP) steering issued Thursday and Friday by the Treasury Division and the U.S. Small Enterprise Administration (SBA) addresses PPP loan maturity dates for all debtors in addition to most loan quantities for sure self-employed people.
The entire updates have been designed to replicate the Paycheck Safety Program Flexibility Act of 2020, P.L. 116,-142, which grew to become legislation June 5 and made vital modifications to the PPP.
June 30 is the ultimate deadline for making use of for a PPP loan, however debtors want to maneuver rapidly as a result of many lenders plan to cease accepting new purposes on Sunday with the intention to attempt to get them into the SBA system by midnight June 30. Some lenders have already got stopped accepting purposes. The recording of the most recent City Corridor Collection webcast from June 25 discusses a few of the obtainable lenders who’re nonetheless accepting purposes. The SBA lender match instrument, obtainable on the SBA web site, can be utilized to attach debtors with lenders.
Regularly Requested Query No. 49 was added Thursday to the Treasury and SBA PPP steering and discusses maturity dates. FAQ No. 49 states that if a PPP loan obtained an SBA loan quantity on or after June 5, 2020, the loan has a five-year maturity.
If a PPP loan obtained an SBA loan quantity earlier than June 5, 2020, the loan has a two-year maturity until the borrower and lender mutually agree to increase the time period of the loan to 5 years. The FAQ states that the promissory observe for the PPP loan will state the time period of the loan.
In the meantime, FAQ No. 10 on the Treasury and SBA steering on the best way to calculate most loan quantities by enterprise kind applies to self-employed people whose companies have been in operation on Feb. 15, 2020, however weren’t in operation from Feb. 15, 2019, to June 30, 2019, and can file a Kind 1040 Schedule C or Schedule F for 2020.
The FAQ explains that the utmost PPP loan quantity on this case would typically be equal to 2.5 occasions the enterprise’s common month-to-month payroll prices incurred in January and February 2020, plus the excellent quantity of any Financial Damage Catastrophe loan (EIDL) obtained between Jan. 31, 2020, and April 3, 2020 that will likely be refinanced by the PPP loan, much less any EIDL Advance obtained.
The FAQ additionally gives a course of for calculating the loan quantity.
Questions 1, 2, 4, 5, 6, and seven within the steering on the best way to calculate loan quantities additionally have been up to date to replicate the 24-week coated interval that was established with the Paycheck Safety Program Flexibility Act of 2020.
The PPP briefly
Congress created the PPP as a part of the $2 trillion Coronavirus Help, Aid, and Financial Safety (CARES) Act, P.L. 116-136. The laws licensed Treasury to make use of the SBA’s 7(a) small enterprise lending program to fund forgivable loans of as much as $10 million per borrower that qualifying companies might spend to cowl payroll, mortgage curiosity, lease, and utilities.
The loans can be found to small companies that have been in operation on Feb. 15 with 500 or fewer workers, together with not-for-profits, veterans’ organizations, Tribal issues, self-employed people, sole proprietorships, and impartial contractors. Companies with greater than 500 workers in sure industries can also apply for loans.
Congress designed the loans to help organizations dealing with financial hardships created by the coronavirus pandemic and help them in persevering with to pay worker salaries. PPP loan recipients can have their loans forgiven in full if the funds have been used for eligible bills and different standards are met.
AICPA specialists talk about the most recent on the PPP and different small enterprise support applications throughout a weekly digital city corridor. The webcasts, which give CPE credit score, are free to AICPA members. Go to the AICPA City Corridor Collection webpage for extra data and to register.
The AICPA’s SBA Paycheck Safety Program Assets web page homes assets and instruments produced by the AICPA to assist handle the financial affect of the coronavirus.
For extra information and reporting on the coronavirus and the way CPAs can deal with challenges associated to the outbreak, go to the JofA‘s coronavirus assets web page or subscribe to our e mail alerts for breaking PPP information.
—Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is the JofA‘s editorial director.