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What We Know About PPP Loans Right Now

What We Know About PPP Loans Right Now

May 8, 2020 | Read Time: 3 Minutes

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There are many resources (online calculators, blogs, FAQ's and videos) attempting to provide an early, all-inclusive interpretation of the debt forgiveness guidelines. However, without clear guidance and an expectation that not every bank will have the same application process, borrowers should consider these key items.

Debt Forgiveness

Until the forgiveness application is finalized at your bank here is what you can do:

  • Keep a detailed payroll summary for each pay period during the 8-week period after the loan proceeds are received. Make sure at least 75% of your loan proceeds are used to retain the number of employees and maintain wages.
  • Have a payroll summary ready for the lookback period you are using for your FTE base.
  • Pay and track rent and utility payments. Be sure you have a signed lease.

Eligibility Certifications

The application all borrowers signed included a number of certifications.

  • "Current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant."
  • "The funds will be used to retain workers and maintain payroll or make mortgage interest payments, lease payments, and utility payments, as specified under the Paycheck Protection Program Rule; I understand that if the funds are knowingly used for unauthorized purposes, the federal government may hold me legally liable, such as for charges of fraud." Source: PPP loan application.

If you cannot certify these two statements, contact your lending institution and talk about repayment options. You only have until May 14, 2020, to repay without penalty or scrutiny.

National news media, bloggers, and YouTube productions are all talking about the flagrant abuse of the program. Don't let your company get caught in the headlines, unwantedly. Having proof of your need for the PPP loan funds will be important. Document changes in sales, loss of employees, vendor shutdowns, inability to pay expenses, and any other changes/uncertainties in case you should be audited by the US Treasury Department.

Due to delayed guidance, banks are finding themselves confused and are being put in a position of responsibility with very limited and/or changing guidance. As your bank may not have had much time to decide on their policies and actions, be considerate of your bank's position, and provide whatever information is needed to speed the process of forgiveness. There is an allotted time to complete the forgiveness determination, so help your banker by being ready for the next step in the PPP loan process, the forgiveness process.

We empathize with our clients. Delayed guidance and new rules have generated confusion for everyone. This is unprecedented territory for all. Thank you again for your confidence in Huberty. We will continue to keep you abreast of any updates as we receive guidance. Using Huberty's COVID-19 planning services will help you be sure you're prepared for the next step. Call our office and set up an appointment to review and create a plan.