Fortunately, the President today, signed a Second Emergency Stimulus Bill allocating additional funding for the paycheck protection program.
In light of how quickly PPP funding was exhausted during the initial round, it is essential that participants complete and file their application immediately.
It is quite critical however, once you receive the funding, that you comply with the government requirements in order to gain the highest forgivable amount possible.
Here is a brief summary of some of the requirements, however please feel free to contact us, your accountants or attorneys for a complete list of requirements:
1. For the 8-week period beginning on the date that loan proceeds were received, at least 75% must be spent on payroll costs.
2. Up to 25% may be spent on interest on covered mortgage obligations that existed as of 2/15/20, covered rent obligations for a lease agreement that existed as of 2/15/20, and covered utility payments.
3. Loan forgiveness may be reduced if there are reductions to the number of full-time equivalent employees (may be disregarded if employees are reinstated by June 30, subject to stipulations)
4. Loan forgiveness may be reduced if individual employees earning less than $100,000 per year are subject to a salary reduction of greater than 25% (may be disregarded if employees are reinstated by June 30, subject to stipulations).
5. Loan forgiveness should be requested from your lender that is servicing the loan and you will need to provide supporting documentation to verify the number of employees on payroll and pay rates (including payroll tax filings) and to verify payments of covered mortgage obligations, rent obligations, and utilities.
We recommend depositing the PPP funds in a separate account to assist with tracking the use of funds to determine how the proceeds will be spent to ensure maximum forgiveness. If you are not able to achieve 100% forgiveness, the balance that is not forgiven will become a 1% loan with a two-year payback period with no collateral, no prepayment penalty and no personal guarantee.
For additional assistance on how to maximize your compliance with the PPP loan program, feel free to contact the President of The Quest Organization, Michael Rosenblatt at Michael@questorg.com.