Our Latest Understanding of PPP Loan Program (SBA Forgivable Loan) 

The U.S. Small Business Administration on Thursday issued an interim final rule (yes. . . that is right, an interim final rule. . .) for the Paycheck Protection Program (PPP), which is offering $349 billion in forgivable loans that small businesses impacted by the Coronavirus pandemic can use to cover costs including payroll and rent.

In addition, early this morning they have issued a NEW application form –  PPP – Final (hopefully) Borrower Application Form.  It is not clear if the SBA will accept the previously issued forms or not.  Therefore, we recommend that you consider completing the new form (unless your banker has instructed you otherwise).

Due to the quickly evolving nature of this situation, and the differing approaches certain banks are taking, we recommend that you stay in close contact with your banker in case anything else changes.  At this point, they are your best source of timely information. (I do feel compelled to say that they are in a difficult situation working through this void in guidance from the SBA and Treasury, so grace is likely warranted).

A Few Clarification Points From a Read of the Interim Final Rule:
  • Average Monthly Payroll Calculation — For most companies this will be calculated on the average monthly payroll of 2019. If your company is extremely seasonal you may elect to use the average payroll between 2/15/2019 and 6/30/2019.  (The guidance is still silent on Trailing 12 versus 2019 pay – stay in close contact with your banker on this.  . . many are calculating and preparing for both scenarios.)
  • Loan interest rate has changed to 1%.
  • Term of loan has changed to 2 years with payment deferral for 6 months.
  • It appears that the other operating factors such as mortgage interest, rent and utilities could make up to, but not more than, 25% of the loan amount repaid by the government.
Thank you for trusting in HSC to assist you as we work through these difficult and uncertain times together.

For more information, contact Scott Touro, MBA at stouro@hsccpa.com.

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