As SBA guidance on Paycheck Protection Program loan requirements is complex, many small businesses have been trying to reconcile a myriad of questions surrounding program details. For example, the requirement to achieve maximum loan forgiveness — that 75 percent of the loan amount must go towards payroll expense –- has raised some concerns for many business owners.
The WBJ article “SBA’s PPP loan forgiveness might be difficult. Bonuses could help”, outlined that loans were calculated based on payroll costs for 2.5 months, allowing for 25 percent of the loan to go towards nonpayroll expenses. But the way many small businesses are structured is not conducive to these conditions, leading many to worry that loans may not be completely forgiven.
MCB Principal Matthew Dwyer provided this insight: “Companies may find it challenging to meet the requirement to use 75 percent of the loan proceeds on payroll costs. These concerns will be mitigated, and loans likely will be forgiven in full, if additional SBA guidance allows bonuses or increases in pay to workers to be included in the forgiveness calculation, or if the SBA allows the same for prepayment of rent or utilities.” Read the entire WBJ article here.
Another WBJ article ”The clock is ticking, yet widespread confusion remains on PPP spending deadlines”, highlighted the uncertainty many businesses are experiencing. MCB Principal Phil Busenitz provided this clarification: “Recipients of PPP loans have eight weeks to spend the loan proceeds on qualifying expenses, which include payroll costs, rent, utilities, and interest on loans secured by real or personal property.” Read this article in its entirety here.
We will continue to update you as we get more information on coronavirus-related legislation and guidance that may impact you. Continue to check back here for the most up to date tax information and changes in response to coronavirus. If you have more questions contact an MCB Advisor at 703-218-3600 or click here.
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