Paycheck Protection Program Loan Forgiveness
April 24, 2020 at 3:15 pm |
To Our Simon Lever Clients and Friends:
The SBA Payroll Protection Program continues to be in the news with the recent addition of $310 billion of additional funding. While this is a large sum of money, the program has been incredibly popular across the entire country. Additionally, banks have been busy ironing out the wrinkles in their processes and working with applicants to correct flaws in their applications if they were shut out of the first round of funding. For this reason, we fully expect the newly appropriated funds to be spoken for in a matter of days. If you have still not applied and are intending to, we urge you to do so today to give yourself the greatest chance of approval.
For those who have received their loan funds already or are scheduled to do so in the coming days from the initial round of funding, the focus turns toward forgiveness of the loans. It is important to remember that while there is potential loan forgiveness, these are still loans — they are not automatic grants. The CARES Act, which is the legislation that created the Payroll Protection Program, includes a number of factors that must be accounted for in order to calculate loan forgiveness. At a high level, these include the following:
- Were the funds spent on qualifying expenses?
- Was there a reduction in full-time equivalent (FTE) employees for the 8-week period starting with the loan origination date as compared to specified base periods?
- Was there a reduction in wages for certain employees for the 8-week period starting with the loan origination date as compared to specified base periods?
Each of the above bullet points includes a number of criteria that must be considered, including various “cure provisions” that can help companies to maximize loan forgiveness even if they have experienced temporary reductions in wages or FTE’s.
Our team at Simon Lever has devoted substantial time and resources toward understanding the CARES Act and specifically, the Payroll Protection Program. We have walked alongside our clients in the applications for loans and intend to do so again as we look to maximize loan forgiveness. In an effort to achieve that, we have developed tools to help calculate and project the various factors that will determine loan forgiveness. These tools were developed based on the current limited guidance available and will be updated as official guidance is released by the US Treasury or the SBA.
Please contact your Simon Lever representative for these tools and assistance in projecting the amount of your loan forgiveness. This continues to be the operational priority of Simon Lever. We are here to help you navigate these uncertain times.
If you have questions and are unsure who to contact, please reach out to Joshua Shroyer at [email protected] for assistance.