In the height of the economic fallout of COVID-19, many small businesses looked to the Paycheck Protection Program (PPP) as a means of staying afloat. Those approved for the program were promised loans backed by the Small Business Administration. They took solace in knowing they could receive full forgiveness if distributed funds were primarily used for payroll and employee benefits.
The PPP has evolved considerably over the past few months — and it will continue to change. The latest proposals are understandably making business owners nervous, but some developments may actually prove beneficial, as highlighted below.
Eligibility Changes for the Second Round of PPP Loans
With uncertainty looming over the U.S. economy, many businesses still require options such as the PPP. Now, however, Congress is debating a more targeted version of the program, in which select businesses can apply for a second loan.
Senate Small Business and Entrepreneurship Chairman Marco Rubio hopes that the second round of PPP funds will help businesses with major revenue declines secure larger forgivable loans than were available during the initial application period. Likewise, Treasury Secretary Steve Mnuchin hopes to focus on “restaurants, hotels and other travel and hospitality businesses” impacted by the fallout of COVID-19.
Expanded Access to PPP Loan Forgiveness
Thankfully, recent efforts have actually made it easier to secure forgiveness. The Paycheck Protection Program Flexibility Act (PPPFA), for example, lends businesses greater flexibility, with just 60 percent of funds now required for payroll.
Given the newfound PPP flexibility and the ten-month deadline for obtaining forgiveness, it is in the best interest of most business owners to avoid rushing through the process. Instead, Association of International Certified Professional Accountants (AICPA) expert Kari Hipsak tells the Journal of Accountancy that it’s best to use this time to make strategic business decisions. Concerns worth exploring include full-time-equivalent (FTE) rules and utility payments.
As you deal with lingering concerns over PPP loan forgiveness, don’t hesitate to seek support from the Highland Tax Group. We can help you navigate this and other small business issues during this difficult time.