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Started By
Message
Changes to PPP Loan Forgiveness
Posted on 6/4/20 at 9:00 am
Posted on 6/4/20 at 9:00 am
PPP Forgiveness Changes
Sorry, I'm not very good at linking or doing the quote thing.
quote:
Following is a summary of the legislation’s main points compiled by the AICPA:
PPP borrowers can choose to extend the eight-week period to 24 weeks, or they can keep the original eight-week period. This flexibility is designed to make it easier for more borrowers to reach full, or almost full, forgiveness.
Under the language in the House bill, the payroll expenditure requirement drops to 60% from 75% but is now a cliff, meaning that borrowers must spend at least 60% on payroll or none of the loan will be forgiven. Currently, a borrower is required to reduce the amount eligible for forgiveness if less than 75% of eligible funds are used for payroll costs, but forgiveness isn’t eliminated if the 75% threshold isn’t met. Rep. Chip Roy (Texas), who co-sponsored the bill in the House, said in a House speech that the bill intended the sliding scale to remain in effect at 60%. Senators Marco Rubio and Susan Collins indicated that technical tweaks could be made to the bill to restore the sliding scale.
Borrowers can use the 24-week period to restore their workforce levels and wages to the pre-pandemic levels required for full forgiveness. This must be done by Dec. 31, a change from the previous deadline of June 30.
The legislation includes two new exceptions allowing borrowers to achieve full PPP loan forgiveness even if they don’t fully restore their workforce. Previous guidance already allowed borrowers to exclude from those calculations employees who turned down good faith offers to be rehired at the same hours and wages as before the pandemic. The new bill allows borrowers to adjust because they could not find qualified employees or were unable to restore business operations to Feb. 15, 2020, levels due to COVID-19 related operating restrictions.
Borrowers now have five years to repay the loan instead of two. The interest rate remains at 1%.
The bill allows businesses that took a PPP loan to also delay payment of their payroll taxes, which was prohibited under the CARES Act.
Sorry, I'm not very good at linking or doing the quote thing.
This post was edited on 6/4/20 at 9:14 am
5
Posted on 6/4/20 at 9:04 am to MotorbikeMike
Your link brings me to the reply page. Not sure how that is even possible. 
Posted on 6/4/20 at 9:05 am to MotorbikeMike
This sets up an interesting tax situation.
With the extension to 24 weeks, and the time it will take to get the forgiveness handled (which could easily be months), the actual forgiveness decision might come until 2021. for a lot of companies.
While the forgiveness is non-taxable, any expenses paid with forgiven funds are non-deductible.
The expenses don't become non-deductible until the forgivness is made. So... if the forgivness isn't made until 2021, what do you do about those expenses on your 2020 tax return?
This is huge, although it's not clear if it is retroactive.
With the extension to 24 weeks, and the time it will take to get the forgiveness handled (which could easily be months), the actual forgiveness decision might come until 2021. for a lot of companies.
While the forgiveness is non-taxable, any expenses paid with forgiven funds are non-deductible.
The expenses don't become non-deductible until the forgivness is made. So... if the forgivness isn't made until 2021, what do you do about those expenses on your 2020 tax return?
quote:
The bill allows businesses that took a PPP loan to also delay payment of their payroll taxes, which was prohibited under the CARES Act.
This is huge, although it's not clear if it is retroactive.
Posted on 6/4/20 at 9:05 am to MotorbikeMike
quote:
Under the language in the House bill, the payroll expenditure requirement drops to 60% from 75% but is now a cliff, meaning that borrowers must spend at least 60% on payroll or none of the loan will be forgiven. Currently, a borrower is required to reduce the amount eligible for forgiveness if less than 75% of eligible funds are used for payroll costs, but forgiveness isn’t eliminated if the 75% threshold isn’t met. Rep. Chip Roy (Texas), who co-sponsored the bill in the House, said in a House speech that the bill intended the sliding scale to remain in effect at 60%. Senators Marco Rubio and Susan Collins indicated that technical tweaks could be made to the bill to restore the sliding scale.
They have had weeks to get this right, and still screwed up. Unbelieveable.
Posted on 6/4/20 at 9:06 am to MotorbikeMike
As an employer I don't like the extension of time to compare employee levels. The original Act compared employee count from the day of my PPP application to June 30. Now my employee count at Dec 31 must be equal to or greater than the number of employees at the time of my application.
I am in construction, we haven't missed a beat from the virus- and we have a few guys that we need to lay off. We have been waiting until June 30, but now I have to carry dead weight until Dec 31? These aren't key positions, so they aren't always refilled.
I am in construction, we haven't missed a beat from the virus- and we have a few guys that we need to lay off. We have been waiting until June 30, but now I have to carry dead weight until Dec 31? These aren't key positions, so they aren't always refilled.
Posted on 6/4/20 at 9:15 am to deaconjones35
Sorry about that.
I did get a chuckle out of that.
Somehow copied the link from the wrong tab which I'm not sure how I even did that.
Think I have it fixed now.
I did get a chuckle out of that.
Somehow copied the link from the wrong tab which I'm not sure how I even did that.
Think I have it fixed now.
Posted on 6/4/20 at 9:16 am to slinger1317
Not sure of how it will all play out, but there is something in there that you can stick with the original 8 week period if you'd like. It may be better for you that way.
Posted on 6/4/20 at 10:42 am to slinger1317
quote:
I am in construction, we haven't missed a beat from the virus
Then PPP was not meant for you in the first place
This post was edited on 6/4/20 at 10:45 am
Posted on 6/5/20 at 10:27 am to Tigerpaw123
Trump signed this into law
Posted on 6/5/20 at 11:38 am to slinger1317
quote:
am in construction, we haven't missed a beat from the virus- and we have a few guys that we need to lay off. We have been waiting until June 30, but now I have to carry dead weight until Dec 31?
No, you don’t, but you probably wouldn’t qualify for protecting their paychecks either.
Posted on 6/5/20 at 12:48 pm to slinger1317
quote:
I am in construction, we haven't missed a beat from the virus- and we have a few guys that we need to lay off. We have been waiting until June 30
Bruh...First of all the whole PPP thing...and obviously not needing it...
But more importantly, you are complaining about not being able to lay guys off when you haven't missed a beat?
Posted on 6/5/20 at 12:55 pm to MotorbikeMike
Other than a loan for many places in shutdown states, PPP doesn't help much because businesses have been forced to close.
Posted on 6/5/20 at 12:56 pm to baldona
quote:
Bruh...First of all the whole PPP thing...and obviously not needing it...
Obviously there are other companies (bars, restaurants, etc.) that are feeling the effects more today but how can we reasonably assume that the construction industry will not experience financial issues in the near future (12 - 18 months) related to the coronavirus? Just because they are not hurting today does not mean that they will not be hurting in the future.
This post was edited on 6/5/20 at 12:57 pm
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