PPP Loan Forgiveness Clarification for 60% Payroll Cost Requirement
June 16, 2020
The U.S. Small Business Administration (SBA) and Treasury have provided additional clarification regarding partial PPP loan forgiveness related to the PPP Flexibility Act. As we previously communicated, the PPP Flexibility Act reduced the original PPP payroll cost requirement from 75% to 60%. However, the change became a cliff, requiring that borrowers use at least 60% of their PPP funds for payroll costs or NONE of their loan would be forgiven.
A joint statement issued by the SBA Administrator and Treasury Secretary clarifies that borrowers can qualify for partial loan forgiveness if less than 60% of the loan is used for payroll. For more information, please click here.
As a reminder, SBA funding for PPP loans is still available and the deadline for submitting applications is June 30, 2020. If your business has been negatively impacted by the coronavirus pandemic and you did not previously apply for a PPP loan but would like to do so now, please contact our office. Our team is available to help you with gathering information for your loan application, as well as provide support and assistance through the forgiveness phase.
For those of you who work with our firm for your tax and accounting needs and have applied for a PPP loan, please remember to send us a copy of your loan application for our records if you have not done so already.
For additional information related to COVID-19 relief provisions, please click here.
This communication and any applicable contents pertaining to COVID-19 employer relief provisions is based on our professional judgment given the facts provided to us and the COVID-19 employer relief provisions guidance as of the date of the communication. Subsequent developments changing the facts provided to us, or differences in the final guidance and regulations once they are issued, may affect the advice provided. These effects may be material.