The Small Business Administration (SBA) has made PPP announcements this week. They announced that they are putting modifications in place to help make it easier to apply for forgiveness on PPP loans taken out during the Coronavirus Outbreak. Recipients of PPP Loans will be happy to hear that some of the restrictions have been eased. Therefore making it more likely that business owners can have these loans forgiven. Here are some of the ways that this can happen.
The PPP Coverage Period
Initially, they designed PPP loans to be in effect for eight weeks after disbursing the money. This eight-week period was what they based the forgiveness or repayment bookkeeping records on.
There is now an extension to a twenty-four-week period. As a result, this will make it easier for some businesses to be within the parameters required for PPP forgiveness.
Lowering the Percentage Requirement for PPP Forgiveness
When PPP loans were first issued, it was with the understanding that at least 75% of the funds received would be used for payroll. Then, the remaining funds will go towards a specific set of operating costs.
The revised PPP forgiveness regulations mean the percentage has been lowered to 60% of the loan to be used for payroll over the new 24-week period. If a company uses less than 60% for payroll, partial forgiveness might still be available.
Increasing Maturity of PPP Loans that Have Been Approved By the SBA
PPP Loans that do not meet the requirements for PPP forgiveness will now mature five years from the date the SBA assigns a loan number for your PPP loan. This increase will give those businesses devastated by the COVID-19 shutdown more time to repay these loans or the portion that cannot be forgiven.
Is There Still Time to Apply for a PPP Loan?
At this time, the SBA is designating June 30th as the last day businesses PPP loan applications can be approved. If you are thinking of applying for this loan, do so immediately before that opportunity passes.
Remember, It’s An Ever-Changing Situation
It’s easy to get confused. The basis for these loans, and the forgiveness benefit, have changed and may continue to evolve as we progress. PPP forgiveness application forms are said to be very confusing and overwhelming and are likely to be revised in a simpler form
Do You Need Help With PPP and PPP Forgiveness Filing?
With JStevens Accounting by your side, you have the help you need, when you need it. Our bookkeeping and accounting services can guide your business through the PPP and SBA loan process, and help you fulfill your forgiveness requirements. Contact us today, and let’s sit down and evaluate your needs.