For our readers who are closely following developments in PPP Loan forgiveness, we offer a brief update. Officially the most recent updates were on May 22 when two Interim Final Rules (IFRs) were released providing additional guidance to borrowers and lenders with respect to the forgiveness process. With those IFRs:
- We now understand more clearly what role our lenders will play in the forgiveness application reviews and approvals.
- We received some clarification on the base periods for FTE and payroll comparisons, and applicable dates for eligible payroll and non-payroll expenses
- We also have some assurance now that forgiveness will not be reduced under both the FTE test and the average employee payroll test in a manner that would double-up on the hit caused by lower hours being worked.
DHJJ Urges Caution in PPP Forgiveness Planning or Calculation at This Time (May 27, 2020)
Many are anxious to dive into the forgiveness calculations now that both the forgiveness application and the IFRs have been released by the US Treasury/SBA. DHJJ however continues to urge caution in doing forgiveness planning or calculations as currently outlined. As we have experienced throughout the PPP process, more information is promised yet to come with respect to what we have officially available as of today. Additionally, and of great consequence, the US House of Representatives and the US Senate are both expected to introduce and vote soon on new bills that will change key provisions of the PPP loan program such as extending the duration of the covered period beyond the current 8 weeks, and modifying or eliminating the requirement to spend 75% of the funds on payroll costs.
For details, we suggest you read this recent Bloomberg article: https://www.bloomberg.com/news/articles/2020-05-26/hoyer-says-house-and-senate-close-on-ppp-loan-extension. Bottom line – the forgiveness application as currently available is expected to be dramatically changed in the near term.
Stay tuned for major developments expected within the next week.