Staten Island CPA - David C Egan, CPA speaking on PPP Loan Forgiveness
Many Staten Island businesses that have
managed to secure financing through the Paycheck Protection Program (PPP) are
fortunate—but also have many questions. Local business owners and managers
should be careful that they adhere strictly to the terms of the program, in order
to qualify for loan forgiveness.
In response to the
coronavirus pandemic, Congress created the Coronavirus Aid, Relief, and
Economic Security (CARES) Act. The historic $2.2 trillion stimulus bills
included $350 billion towards the PPP, a forgivable loan program targeted to
aid small businesses dealing with losses resulting from the coronavirus
pandemic. Unfortunately, the Small Business Administration (SBA) loan program,
which was rapidly flooded with applications, quickly utliized the money
available for emergency loans (EIDL). Congress is expected to authorize more funds for
the program. We will update you once this is passed.
While business owners who
did manage to secure a PPP loan are fortunate, they also have a lot of work
ahead of them. In order to qualify for loan forgiveness, the PPP funds must be
used for certain allowable purposes, including:
·
Salaries,
wages, commissions, or similar compensations (up to $100,000 per year per
employee, prorated);
·
Cash
tips or equivalent;
·
Employee
leave, including parental, family, medical, or sick (excluding family or sick
leave under the Families First Coronavirus Response Act);
·
Allowances
for dismissal or separation;
·
Group
healthcare benefits, including insurance premiums;
·
Retirement
benefits;
·
State
or local taxes on employee compensation
·
Continuation
of group healthcare benefits during employee leave and insurance premiums;
·
Mortgage
interest, rent, utility payments, and any other debt obligations incurred prior
to February 15, 2020;
·
Compensation
and income of up to $100,000 per year (prorated) for sole proprietors and
independent contractors.
Money used for any of the
allowable purposes listed above will qualify for 100% forgiveness; loan
money used for non-allowable purposes must be repaid. This means that
businesses who take on PPP loans must shoulder a big burden of new reporting
requirements. Failure to keep thorough records of how the loan money is used
could result in loss of forgiveness for some portions of the loan
money.
In order to qualify for
loan forgiveness, recipients will need to provide banks with specific
information, including up-to-date financials. Organizations that have a
controller or other such financial administrator on staff are more likely to be
in a good position to meet the stringent reporting regulations. Businesses
without such a team member would benefit greatly from securing outside help in
order to adhere to the strict rules.
Now is the time to take action. If you are an existing client, or seeking to establish a long-term relationship with our firm, contact us today at (718) 227-6035 or visit us online at www.gosucpa.com
If your organization falls
into the latter category, or if your financial administrator is not up to the
task alone, you should seriously consider reaching out to Goldenthal & Suss
Consulting PC to discuss your options when it comes to outsourced
accounting services. Our team is prepared to help guide organizations in
achieving successful PPP loan forgiveness and more.
We can assist you with:
·
Accounting
catchup and cleanup for the first quarter of 2020
·
Preparation
of payroll cost calculations needed for the PPP application
·
Assistance
with PPP and other loan applications related to the coronavirus pandemic
·
Help
with performing real-time reporting in order to adhere to loan forgiveness
regulations
·
Advice
and guidance for post-pandemic success
Our team is here to offer
sound advice, clear guidance, and knowledgeable input to help you achieve
financial relief during this uncertain time. Contact us today to discuss how we
can accommodate your unique situation.
Contact our team today at
718-227-6035 or visit us at www.gosucpa.com
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