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PPP Loans Update

On Friday, June 5, 2020, President Trump signed into law the Paycheck Protection Program Flexibility Act (PPPFA).

Following is a summary of some of the changes that will impact our clients:

You now have 24 weeks. If you received PPP funds, you can choose to extend the 8-week period to 24 weeks, or you can keep the original period if that is a better answer for you. The original rules were that you had to use the funds in the eight-week period from when funds were received. The PPPFA extends the time period to 24 weeks.

If you are in the process of receiving funds, you will receive the 24 weeks automatically.

Deadline is now December 31st. You can use the 24-week period to restore your workforce to pre-COVID levels in order to achieve full forgiveness. That deadline is no longer June 30 – it is now December 31 (if your 24-week period goes that far).

Exceptions for not reaching pre-COVID employment levels. If you can’t reach your pre-COVID workforce level, there is a provision in the bill that still allows for full forgiveness if:

you cannot rehire an individual who was an employee that was furloughed,

you cannot find similarly qualified employees, or

you were unable to restore business operations to pre-COVID levels due to COVID-related operating restrictions (requirements or guidance issued by CDC or OSHA).

The payroll expenditure threshold is now 60% instead of 75%. However, now that is all or nothing. You must spend at least 60% on payroll or none of the loan is forgiven. Payroll costs include regular compensation, commissions, bonuses, payments for leave, separation payments, employee benefits (health care premiums, retirement contributions, etc.).

Repayment period extended. The repayment period of non-forgiven loans is now 5 years (instead of 2) and is still at 1% interest.

Payroll tax payment deferral. Payroll taxes can now be deferred if there is loan forgiveness. This is a reversal of the original PPP. The employer portion of employment taxes can be deferred to 50% due 12/31/21 and 50% due 12/31/22.

New Treasury SBA Loan Forgiveness Guidance

Prior to the law signed on June 5th, the Treasury issued guidance on loan forgiveness and it is unclear if they will adjust to the new law. Please see below for some of the provisions in the new Treasury guidelines:

Cap on owner and self-employed individuals’ allowable payroll compensation. If you are a Schedule C or self-employed person who received PPP funds, there are limits on the amount you can use as “payroll” for yourself. For example, for a self-employed person, the forgiveness amount is capped right now at $15,385 in owner compensation. They arrived at that number by taking $100,000 times 8/52 weeks = $15,385. It is unclear if they will issue guidance to increase that amount to fall in line with the new 24-week period signed into law on June 5th. Our assumption is that if they do extend to be in line with the new law, the new cap would probably be $46,154 (24/52 weeks).

Forgiveness tied to maintaining same level of full-time employees or FTEs. If you fall below that, your forgiveness amount will be reduced by that same percentage of reduction in your FTEs. This assumes you don’t qualify for the exceptions in the law signed Friday.

Any amount of wages reduced in excess of 25% per employee will not be forgiven. You can offset any wage reductions with hazard pay or bonuses – those would be eligible for forgiveness.

Cornerstone offices are now open!

Our offices are now open, although we are following certain protocols.

We are spacing out our meetings in the conference room to allow for cleaning in between meetings.

  • We are wearing face masks if we are working with someone closer than 6 feet apart.

  • We ask that you use the hand sanitizer provided before and after any meeting with us.

  • Please do not come see us if you are experiencing any of the following symptoms:​

  • Cough

  • Shortness of breath

  • Fever > 100.4F

  • Sore throat

  • Nausea/vomiting

  • Achiness

We are still working via phone/Zoom, etc as much as possible to limit exposure.

If you had your return processed with the paper copy ready to be picked up once the stay-at-home order was lifted, your return packet is ready for pickup. Please come by at any time to pick up your packet.

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