PPP Update April 4, 2020
Unfortunately we feel it necessary to send yet another update on the current situation with the application for Paycheck Protection Program loans (PPP).
Events are continually evolving.
As you know yesterday was the first day that entities who wanted to make a PPP submission were supposedly able to. We are aware of only one major bank that was actually ready to accept applications. That bank, thankfully, followed the basic application format without requesting additional information. That may of course change and we cannot currently state that other banks will follow suit.
In the last 24 hours or so regulations have begun to appear that include subtle changes to the original explanatory documents that were available. Following is a summary of those:
• The loans are now 2 year loans with an interest rate of 1%. Payments are deferred (not interest) for six months.
• 1099 payments of any type are not included in the calculation of payroll costs.
• Many of the major payroll companies and PEO’s can provide reports which detail the amount of the payroll costs for 2019. In our opinion we believe that some of those reports are incorrectly calculated and you should review them carefully before using them to determine your total payroll costs (see below).
• Certain payroll providers have taken the position that for 2019 the amount of salary should be reduced by the employee portion of FICA/Medicare and federal withholding. This is not what the latest regulations state. This only needs to be done for the payroll cost calculation for the period February 15, 2020 to June 30, 2020 which will come into consideration when calculating the forgiveness portion or if you apply a fiscal twelve months for the loan calculation or using the alternative calculation if you were not in business last year.
We will continue to inform as best we can and as fast as we can. We are available as you need.
Partners and Staff of LHF