PPP Forgiveness Application Update 9/11/20
For the latest update by Alan Gassman read his article on Forbes.com here
On August 24th, the SBA issued some new guidelines around the allowable expenses. Two issues are critical
- Rent expense to related party is only partially allowed. If the landlord has a mortgage on the property, only the interest portion of the rent payment is allowed. This affects many wineries because they often “rent” the space from a related party that owns the land. Yes this is unfair and illogical, but as with all things PPP, it is par for the course.
- Medical and retirement payments for owners is more complicated, because depending on the legal structure of the business, the rules are very different.
My recommendation is to extend your covered payroll period to 24 weeks. Remember back when we only had 8 weeks of expenses to earn full forgiveness so we were tracking every expense possible? (I barely remember.) Now that you have up to 24 weeks to earn full forgiveness, most of you will have plenty of payroll wages to cover the entire PPP loan. I think that your Forgiveness Application will be processed smoother and with less hassle if you only use wages for your payroll number and don’t use any other expenses.
My second recommendation is that if your loan is over $150k, go ahead and submit your Forgiveness Application now if your bank has opened their portal and is accepting them. The SBA began accepting FAs on August 10th, but not all banks have opened their portals at this time.
If you are under $150k, you might want to wait for the official ruling around the “automatic forgiveness“. The Rubio/Collins bill called “The Continuing Small Business Recovery and Paycheck Protection Program Act”. This bill was introduced on July 27th and initially had strong bi-partisan support. But it has now become political and has stalled. The banks are the ones pushing for the automatic forgiveness, and many are waiting for this to pass before opening their portals.
PPP Forgivneness Application Update 8/12/20
I am guessing that most of you gave up tracking the guidances issued by the Treasury and the SBA, because there have been so many. Even the Treasury stopped giving them numbers.
Here are the highlights. For the forms go to Treasury.gov & PPP
- Loan Forgiveness Application, revised 6/16/20
- If the State or other entity issued an order to close the tasting room, they you have an automatic exemption to the FTE calculation. This means that for most wineries, the FTE calculation is no longer an issue, and you probably qualify for the EZ Loan Forgiveness Application form
- EZ Loan Forgiveness Application, issued 6/15/20
- Read the instructions first to see if you qualify. Most of you will qualify because the FTE or the average paid hours is essentially “N/A” due to the exemption caused by the mandated closing of the tasting rooms.
- Pay attention to the “hourly wage” detail. If your tasting room crew is paid by a combination of regular wage, commissions, club signup fee, or other random payment, then you will need to calculate their TOTAL earnings divided by their hours worked for the “effective” hourly wage for a given pay period. This detail could disqualify you from using the EZ form
- If you do qualify for the EZ form, you must still save all of your documents and worksheets. The distinction is that you do not have to submit them with the application.
- FAQs, updated 8/11/20
- There have been many changes to the medical, retirement, and “transportation” allowable expenses. However, since the covered period has been extended to 24 weeks, you should have enough regular payroll to achieve full forgiveness without including those problematic expenses.
- They explain how the EIDL Grant is handled – this is super goofy and convoluted. See my post on handling this detail Go Here
As of today not one bank has opened their portal to begin accepting Forgiveness Applications, although they all have sent out emails saying that it is coming soon. I recommend that you hold off submitting your paperwork a month or so, because the rules are going to change again. The banks will be flooded with applications, and I prefer that someone else’s application gets stuck in that mess. You have a full 10 months after the end of your covered period to submit your application so there is no immediate hurry. However, if you happen to be in a situation where the FTE calculation is critical to meeting full forgiveness, then go ahead and submit now so that you stop the clock.
Once again, my thanks to Alan Gassman and his team. They are providing clear and concise updates in the PPP and EIDL world. Check out his articles on Forbes.com Gassman & PPP 8/4/20