COVID-19 Grants Available for Small Businesses

Communities in Southwest Indiana were recently awarded competitive grant funding through the Indiana Office of Community and Rural Affairs. The funding will help local small businesses, with 25 employees or less, continue to operate during the COVID-19 pandemic. This grant funding offers grants to businesses in high risk categories including: food and beverage, personal care, professional services, and retail sectors.


   Click here for Southwest Indiana Grants

On May 8, 2020, officials from the City of Jeffersonville, in partnership with One Southern Indiana (1si), the chamber of commerce and economic development organization for Clark and Floyd counties, Ind., established a forgivable loan fund of up to $250,000. Called “Jeffersonville Sustains,” the program will provide access to operating capital for specific small businesses within the City of Jeffersonville that have been negatively impacted by the 2020 COVID-19 pandemic. Qualified business must be locally owned and operated restaurants, including bars, entertainment venues, boutiques, salons and retail shops not part of a national chain or franchise.

The request process opened
May 12th, and applications will be accepted through MONDAY, MAY 18th at 5 P.M..

Click here for Jeffersonville Sustains

SBA Releases New Guidance on the Topic of FAQ31 with FAQ46

The SBA released new guidance today on the topic of FAQ31 with FAQ46 (captured below in full). The guidance comes just one day before the 5/14/2020 deadline for PPP borrowers to return loan proceeds in full if they are concerned over the FAQ31 attestation language expansion.

This guidance has been anxiously awaited by all borrowers, but particularly by those with loans in excess of $2 million which will be subject to mandatory audits previously announced by the Treasury Secretary. In addition, many borrowers are well underway with expending their loan proceeds on approved uses including staffing decisions based on the receipt of the PPP loan.

Loan Amounts under $2 million
This new guidance has some very positive outcomes for most borrowers. Primarily, if the loan amount is less than $2 million (when taking into account affiliation rules of related companies that may have received separate loans), the borrower(s) is/are automatically granted Safe Harbor in regards to the expanded attestation question in FAQ31. In other words, borrowers no longer need take into account access to other sources of liquidity or consider the detrimental impacts to the business of using this liquidity. This will provide a sigh of relief for most small businesses that received these loans.

Loan Amounts over $2 million
It has been noted that over 25,000 borrowers nationwide received loans over the $2 million threshold. These borrowers may still seek Safe Harbor if they return the loan by tomorrow (5/14/2020), but for most that elect to keep the loan, they will still be subject to a mandatory audit. The SBA noted that if borrowers choose not to seek Safe Harbor they may still have a case for keeping the loan proceeds.

It is unclear if this SBA audit is to occur within the 60 days after the borrower provides the necessary support to request loan forgiveness (as is provided for within the Cares Act) or some period much longer. Assuming it is within 60 days, the first test will be to determine if the borrower is eligible for any forgiveness at all, under the expanded attestation in FAQ31 and now FAQ46. If the SBA deems that the borrower fails this test, then this new guidance below indicates that the SBA will not “pursue administrative enforcement or referrals to other agencies” so long as the loan is paid back upon receiving notice from the SBA of this determination. In addition, the Bank is still entitled to its SBA guarantee of the loan.

If it is determined that the borrower is not eligible for forgiveness, this determination would occur after the covered period is over. For borrowers who took large loans to maintain or rebuild payrolls and who may have already spent all or most of the loan proceeds on approved expenses, the question is: how much time is there to pay the loan back? It is unclear at this time if it is due immediately upon SBA request or face “administrative enforcement” or whether the borrower would have the full 2 years to pay back the loan.

Even with this additional guidance, questions remain: Is the SBA trying to force borrowers with access to cash and available lines of credit larger than the PPP loans to use those funds to pay back the loans? Will the decision be a simple math equation in the audit or will the company-specific circumstances be the determining factor in deciding forgiveness? It is very unclear how the auditors will make this determination, but documentation of how the borrower meets the expanded attestation is as important as ever for these larger borrowers. Equally important may be the need to maintain access to liquidity in an amount of the PPP loan that was already spent. For those borrowers that do not have enough liquidity to pay back the PPP loans that they spent as intended, will they automatically pass this attestation test and be offered forgiveness? That remains to be seen.

Here is the FAQ46 from the guidance today, 5/13/2020

46. Question: How will SBA review borrowers’ required good-faith certification concerning the necessity of their loan request?

Answer: When submitting a PPP application, all borrowers must certify in good faith that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” SBA, in consultation with the Department of the Treasury, has determined that the following safe harbor will apply to SBA’s review of PPP loans with respect to this issue: Any borrower that, together with its affiliates (20), received PPP loans with an original principal amount of less than $2 million will be deemed to have made the required certification concerning the necessity of the loan request in good faith.

SBA has determined that this safe harbor is appropriate because borrowers with loans below this threshold are generally less likely to have had access to adequate sources of liquidity in the current economic environment than borrowers that obtained larger loans. This safe harbor will also promote economic certainty as PPP borrowers with more limited resources endeavor to retain and rehire employees. In addition, given the large volume of PPP loans, this approach will enable SBA to conserve its finite audit resources and focus its reviews on larger loans, where the compliance effort may yield higher returns.

Importantly, borrowers with loans greater than $2 million that do not satisfy this safe harbor may still have an adequate basis for making the required good-faith certification, based on their individual circumstances in light of the language of the certification and SBA guidance. SBA has previously stated that all PPP loans in excess of $2 million, and other PPP loans as appropriate, will be subject to review by SBA for compliance with program requirements set forth in the PPP Interim Final Rules and in the Borrower Application Form.

If SBA determines in the course of its review that a borrower lacked an adequate basis for the required certification concerning the necessity of the loan request, SBA will seek repayment of the outstanding PPP loan balance and will inform the lender that the borrower is not eligible for loan forgiveness. If the borrower repays the loan after receiving notification from SBA, SBA will not pursue administrative enforcement or referrals to other agencies based on its determination with respect to the certification concerning necessity of the loan request. SBA’s determination concerning the certification regarding the necessity of the loan request will not affect SBA’s loan guarantee.

(20) For purposes of this safe harbor, a borrower must include its affiliates to the extent required under the interim final rule on affiliates, 85 FR 20817 (April 15, 2020).
(21) Question 46 published May 13, 2020.

Please contact Scott Touro, MBA at with any questions.

“Nontaxable” PPP Loan Forgiveness Will Essentially Be Taxable

The Internal Revenue Service has clarified in an IRS notice today, that no deductions will be allowed for those expenses resulting in loan forgiveness granted through the Paycheck Protection Program.  While we are disappointed in this outcome, it did not come as a surprise (as predicted in our 4/17/2020 PPP Forgiveness Webinar). In most cases this should not change a business’s decision on whether to accept the PPP funds or not.  For details, please see the full IRS notice.

Please contact Scott Touro, MBA at for more information.

PPP Loans – Government Announces Planned Audits of Certain Borrowers Carefully Review and Document Your Good Faith Certification

It has been widely publicized that many small businesses did not receive funding in PPP “Round 1”. Coinciding with the timing of approval by Congress of “Round 2” on Thursday 4/23/2020, the SBA issued FAQ 31 to its FAQ document. This is on the heels of well-publicized reports of public companies receiving, and eventually returning, large SBA loans under the PPP program.

In addition, on April 28, Treasury Secretary Mnuchin told CNBC that the government will perform a full audit on any company taking out more than $2 million from the PPP loan program. “We will make sure that what was the intent for taxpayers is fulfilled here,” Mnuchin said in a CNBC interview. “This was a program designed for small businesses. It was not a program that was designed for public companies that had liquidity.'”

FAQ 31 (see below for full excerpt) introduces additional guidance regarding qualification: “. . . Specifically, before submitting a PPP application, all borrowers should review carefully the required certification that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant. Borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business. . .”

What does the new guidance mean?

It is important to note the following key elements:

  1. Borrowers were already required to attest on the application that “current economic uncertainty makes the loan request necessary to support ongoing operations of the applicant”.
  2. The CARES Act had specifically and intentionally excluded a requirement that borrowers establish they did not have access to credit elsewhere (which is typically required for SBA 7(a) Loans), but was silent in terms of a liquidity standard. This apparently has been revised now, at least in the eyes of the SBA and the US Treasury.
  3. With this new guidance, “Borrowers must make this [original] certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business.”
  4. Safe Harbor – To emphasize its point, the SBA is offering a Safe Harbor for applicants that may no longer think they qualify. “Any borrower that applied for a PPP loan prior to the issuance of this guidance and repays the loan in full by May 7, 2020 will be deemed by SBA to have made the required certification in good faith.”

There are three key points here that each borrower needs to examine:

1. “Current Business Activity” 

The example is silent in terms of what “current business activity” should be taken into account. Each business might be impacted in one or more different ways, from reduced sales, diminishing backlog and sales outlooks, contracts put on hold, stretched receivables, increased credit risk, disrupted supply chains, pressure on staffing and wages due to increased state and federal unemployment benefits, closures, or uncertainty on when they can open for business again, just to name a few examples.

In addition, what if an employee becomes infected in the workplace? What additional costs or lost revenues might be incurred?

2. “Other sources of liquidity” 

The example in FAQ 31 cites that public companies with substantial market value and access to capital markets would be unlikely to be able to make the certification in good faith.

Public companies with access to capital markets, significant cash balances, or available lines of credit may be perceived to have other sufficient sources of liquidity (whether they would feel compelled to tap that liquidity to maintain employment and incur losses is another question. . . ).

The FAQ provides no examples for small privately-held businesses. Whether that is an intentional omission is unknown; however, with the latest announcement from the Treasury, we now know that any loan greater than $2 million will be audited.

It seems reasonable to question whether existing liquidity is sufficient to weather an unprecedented public-health-driven economic crisis. It might seem “possible” that current liquidity is sufficient under one scenario, but what if the business conditions linger for months, quarters, or years? How available will emergency capital be from traditional lending sources at that time? If it is available, might it be under acceptable and reasonable terms?

3. “Not significantly detrimental”

We already know that anyone that applied for the PPP loans attested that current economic uncertainty makes the loan request necessary. When uncertainty increases, the need for liquidity and cash flow shifts from being very important to critically vital.

Most small, privately held businesses have limited access to liquidity beyond the owners’ personal assets and/or traditional financing which is underwritten based on expected cash flows and collateral and allowed borrowings are often governed by a defined borrowing base. Many or most of traditional financing agreements also include certain financial covenants which, if not maintained, can result in technical default (if not waived by the bank).  Traditional financing, with these types of restrictions and criteria, may limit access to liquidity, sometimes when it is needed most.

This is where the rubber meets the road. Many business owners might desire to help their employees and keep them off the unemployment rolls, but, will a business with reduced sales continue to keep employees on payroll, incur losses, and go further into debt by tapping this liquidity? What if declining sales or aging receivables causes a reduction to your borrowing base and access to liquidity under your line of credit? What if this causes the loan to go into technical default? Is that significantly detrimental?

For many small businesses, a line of credit is their last lifeline for business continuity. When weighing whether to accept PPP Loan funds for liquidity to keep the bulk of the workforce employed, would the alternative of potentially exhausting this line of credit lifeline be considered significantly detrimental?

So what does this mean to most privately-owned small and medium sized businesses and what should you do if you applied for and received an SBA loan? Clearly the fact that large public companies received these loans and elected to return the funds sets a precedent to take note of. That said there is a big difference between the extremes of a public company that can issue stock and a mom and pop small business in terms of “sufficient liquidity” and capitalization. The latter that are in dire need of these funds would hopefully easily pass this requirement just as easily as a Fortune 500 firm might fail.

We hope that for the companies that fall somewhere in between, that common business sense might prevail. Given the revised guidance issued by the SBA and the pending May 7, 2020 deadline for returning loan proceeds, we strongly encourage you, your organization’s management, and board of directors to carefully and immediately review your company’s financial situation and reconsider the relief you may have already received with a PPP loan. Specifically, consider whether your circumstances fall within the spirit and intent of this economic relief program.

It is unfortunate that the new guidance is not more clear and objective as it may well leave well-meaning business owners with real-time questions about whether they should take the PPP Loans and ensure the employment of their employees.

What if you no longer feel you qualify?

If you have been approved for a PPP loan and repay the loan in full by 5/7/2020 (i.e. no loan forgiveness) then your original attestation will be accepted in good faith and the new requirements will not be enforced and the borrower will be offered safe harbor. If not, it apparently is assumed that you have accepted this revised version of the attestation.

What if you believe you still qualify?

If you do receive and keep PPP funding, it is critical that you maintain complete and accurate documentation to support your eligibility for such funding, the specific use of these funds, as well as your qualifications for forgiveness under the terms of the program. Speak to your advisors and legal counsel and keep good records. This documentation will be crucial were your business to be audited and/or investigated. This defensive documentation will greatly minimize your potential exposure related to your participation in this loan program.

Many of the factors influencing whether you qualify or should apply for these loans are organization specific. We encourage you to consult with legal counsel if you have questions regarding your organization’s eligibility to receive funds.

Please contact Scott Touro, MBA at for more information.

Accelerating COVID-19 Losses Into 2019 To Improve Cash Flow

For companies experiencing financial loss due to the COVID-19 economic crisis, finding ways to quickly increase cash flow is a top priority. One opportunity to be considered is whether COVID-19 losses incurred in the current year can be moved into 2019 to offset income or to create a net operating loss eligible for the revived carryback provisions.

Under section 165(i), companies experiencing financial loss due to natural disasters may accelerate those losses to the fiscal year immediately preceding the crisis event.

The following are examples of potential losses, if directly attributable to COVID-19, that could be eligible under this provision:

  • Inventory scrapped due to spoilage during government shutdown;
  • Worthless securities (but not bad debts);
  • Closure costs of store and facility locations;
  • Complete abandonment of leasehold improvements;
  • Permanent retirement of fixed assets;
  • Abandonment of pending business deals for costs otherwise capitalized;
  • Termination payments to cancel contracts, leases or licenses;
  • Prepaid events, travel, conference space, hotel rooms, etc. when taxpayer is not provided a refund or credit;
  • Prepaid raw materials or other items to fulfill a contract and the contract has been cancelled;
  • Mark-to-market securities; or
  • Losses from the sale or exchange of property.

For more information, see the article from RSM, or contact John Rittichier, CPA at or Mike Vogel, CPA at

Ten Things We Need To Know About Paycheck Protection Program Loan Forgiveness

Excerpted from Forbes article by Tony Nitti

What we do know….On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Securities (CARES) Act, a $2.3 trillion relief package designed to help individuals and businesses weather the economic damage caused by the COVID-19 pandemic.

The headliner of the CARES Act was the creation of the Paycheck Protection Program (PPP), a new loan package designed to put $350 billion into the hands of small businesses for use in paying employee wages and other critical expenses over the coming weeks and months. As of the morning of April 15th, nearly $250 billion in cash had made its way to over one million small businesses, and Congress had already begun negotiations on a second round of PPP funding.

Now, let’s dive into everything we DON’T know about forgiveness. Ten things, to be exact. 

Please contact Scott Touro, MBA at for more information.

NEW FAQs on COVID-19 related Sick Leave and Family Leave

The Internal Revenue Service posted new Frequently Asked Questions (FAQs) regarding COVID-19-Related Tax Credits for Required Paid Leave Provided by Small and Midsize Businesses enacted by The Families First Coronavirus Response Act (the “FFCRA”).FAQ’s include the following and more:
  1. When can employers start claiming the credits?
  2. How do employers claim the credits?
  3. What documentation must be retained?
  4. Are similar tax credits available to self-employed individuals?

This is very helpful information for those companies who are beginning to have sick and family leave cases that fall within the FFRCA.

Please contact Matt Folz, CPA at for more information.

Executive Insights: Wealth Management

It’s always good to have a solid financial expert in your corner. But when times are challenging and the markets are roiled, it’s even more important. We gathered five wealth management professionals to talk about the latest developments in the industry and get their takes on what investors need to know in the current climate. Business First publisher Lisa Benson moderated the discussion with Joe Reeves, chief executive officer of ARGI; Dean Donohue, chief executive officer of Encore Wealth Management Group; Scott Olinger, CEO of Harding, Shymanski and Co. PSC.; John Gardner, director and market executive Merrill Louisville; and Kellie Sheryak, senior vice president for UBS Financial Services Inc. The participants paid for a seat at the table for this discussion.

Click here to read the full article published by Lousiville Business First.

CARES Act Provider Relief Fund Regulatory Alert: HHS CARES Act Grant Funding Attestation Portal Now Open

The Portal for attestation of receipt and acceptance of the Provider Relief funds authorized under the CARES act is now open. Providers that received a payment from HHS as part of the Provider Relief Fund authorized under the CARES Act must sign an attestation confirming receipt of the funds and agreeing to the terms and conditions within 30 days of receiving payment.

HHS has set up the web page portal which can be found by clicking this link.

To complete the attestation, providers and medical practices must provide their Taxpayer Identification Number (Either EIN or SSN) that is attached to the enrolled providers for whom the attestation is being sought. The provider will be asked to verify the amount received as part of this process prior to signing the attestation.

Should you choose to reject the funds, you must also complete the attestation to indicate this choice. The Portal will guide you through the attestation process to accept or reject the funds.

It is advised that providers fully understand the terms and conditions of the funding before signing the attestation.

Since the release of the first phase of money from the Provider Relief Fund last Friday (4/10) many providers have been raising questions about these funds. CMS staff have informed us that they are creating a FAQ page for the Provider Relief fund which they will be posting soon. The FAQs should  respond to the questions that have been raised such as:

  • What should a provider do if he/she feels the amount of money they’ve received is incorrect – too high or too low?
  • What should a provide do if he/she did not receive a payment but believes they are entitled to a payment? CMS said they intend to have more information about the Provide Relief Program posted this week on the Provider Relief web page.
CMS has also established the Provider Relief Payment Hotline for providers with questions to call. The hotline number is (866) 569-3522

More to come as information becomes available.

Please contact Brenda Wallace, CPA, CMPE at for more information.