Now that many small businesses have received or are waiting for funding of their Paycheck Protection Program (“PPP”) loans, focus should now turn to the Loan Forgiveness phase of the PPP Loan program. While applying for loan forgiveness does not start until after June 30, 2020, what you do during the 8-week “Covered Period,” which begins on the date of loan origination, can impact the amount of loan forgiveness received. For this reason, now is the time for businesses to make sure that procedures are in place to comply with the strict loan forgiveness requirements set forth in the CARES Act. Businesses that meet these requirements will have the greatest likelihood of maximizing loan forgiveness.
Gettry Marcus CPA, P.C. and CMM hosted a complimentary webinar on April 23, 2020 that addressed the specific loan forgiveness provisions and what you should be doing during the critical 8-week Covered Period. The webinar included examples and planning tools that can be used to help achieve maximum loan forgiveness.
• The tests that have to be met during the 8-week Covered Period:
-Use of loan proceeds
-Full time equivalent employee (“FTE”) test
-Compensation reduction test
• An approach to use to calculate FTE headcount
• How re-hiring employees during the Covered Period can impact loan forgiveness
• The payroll and accounting records, as well as supporting documentation, that needs to be maintained during the Covered Period