Here are some quick facts on the PPP Flexibility Act forgiveness! You don’t want to miss this info:
1. PPP borrowers can choose to extend the eligible period from 8 to 24 weeks from the date of the loan’s origination (or December 31, 2020, whichever comes earlier). They can also keep the original 8-week period.
2. The requirement that 75% of the loan is used for payroll is updated to 60%.
3. If a borrower fails to spend 60% of the loan on payroll costs, NONE of the loan is forgivable (before a portion was forgivable).
4. As long as the workforce level and wages are restored to February 15th levels prior to December 31, 2020 (instead of June 30, 2020), no reduction in forgiveness will be required. Additional exceptions to this also apply if a business is unable to comply.
5. A borrower can defer all of its 2020 Social Security tax to 2021 and 2022, EVEN IF the PPP loan is forgiven prior to December 31, 2020.
6. Borrowers MIGHT have 5 years to repay the loan instead of 2. This goes into effect for loans taken after the date of the bill. Loans issued prior to this bill are subject to modification by the bank.
UPDATE to the PPP Flexibility Act AS OF JULY 31, 2020
Throughout the last couple of months, we have learned more about the Paycheck Protection Program and are happy to provide an update to this information for Tucson business owners and more.
- Your bank will determine what you need to provide when you apply for forgiveness.
- The documentation you will likely need to provide:
- Payroll compensation
- Bank statements showing payroll drafts
- Tax forms (Form 941)
- Payroll journals showing amounts paid and the average number of a full-time employee’s for all calculations
- Other payroll costs
- Health insurance payment receipts
- Retirement plan payment receipts
- Nonpayroll costs
- Mortgage interest payment confirmation
- Rent or lease payment confirmation
- Utility payment confirmation
- Payroll compensation
- Other documentation you might want on hand:
- Documentation showing wages/salaries weren’t reduced
- Documentation related to avoiding full-time employee reduction (i.e. job offers, job refusals, firings with cause, written hour reduction requests, etc.)
- Maintain records for six years after the loan is forgiven or paid in full.This is important in case the SBA decides to review your PPP loan!
- Utilize your accounting software to help you keep track of PPP funds.If you use Quickbooks Online, the easiest way to keep track of PPP funds is to:
- Create a “PPP Loan” account under Other Current Liability and put the loan funds to this account.
- Create a “PPP Loan” customer.
- Point all PPP expenses to the “PPP Loan” customer.
- Pull a Profit & Loss statement by the customer for a report of your PPP Loan expenses.
- Once your loan is forgiven, move the liability to “Grant Income” on your Profit & Loss statement
Are you a Tucson business owner looking for PPP guidance? Contact us for more information.
newest source: https://www.forbes.com/sites/kylewestaway/2020/05/28/latest-sba-updates-on-ppp-loan-forgiveness/#35197bd54254