PPP Loan Forgiveness Do’s and Don’ts

Newly released Small Business Administration FAQ document offers guidance on tricky CARES Act provisions.

WASHINGTON—For remodelers who’ve hit a snag on submitting their Paycheck Protection Program (PPP) loan-forgiveness information there is some good news. The Small Business Administration recently released answers to Frequently Asked Questions it is getting from small-business owners who are trying to get their loans forgiven.

The document features answers to questions in several key areas—Assigning Payroll Costs, Non-payroll Costs, Loan-forgiveness Reductions and Economic Injury Disaster Loan FAQs.

One top question? Whether payroll costs that were incurred during the covered period, but paid after it ended, are eligible for loan forgiveness. The answer? Yes, if they are paid during the very next pay period, they are. The SBA gives an example:

“If a borrower received its loan before June 5, 2020 and elects to use a 24-week Covered Period. The borrower’s Covered Period runs from Monday, April 20 through Sunday, October 4. The borrower has a biweekly payroll cycle, with a pay period ending on Sunday, October 4. However, the borrower will not make the corresponding payroll payment until the next regular payroll date of Friday, October 9. Under these circumstances, the borrower incurred payroll costs during the Covered Period and may seek loan forgiveness for the payroll costs paid on October 9 because the cost was incurred during the Covered Period and payment was made on the first regular payroll date after the Covered Period.”

Another question frequently asked is whether borrowers must make payments on their loans before the SBA loan forgiveness paperwork has been processed. The answer? No, so long as the paperwork was completed and submitted within 10 months of the completion of the Covered Period. Following that, the question of whether payroll costs that were incurred before the Covered Period but paid during the Covered Period were eligible for loan forgiveness persists. And the answer, very simply: Yes. 

Those questions and many more are plaguing remodelers right now, navigating the changes in the industry, and keeping on top of economic changes. The Small Business Association’s full list of questions and answers can be found here. Those borrowing money may use this list as a guide, with the understanding that it is the SBA’s interpretation of the CARES Act, the Flexibility Act, and the Paycheck Protection Program Interim Final Rules (“PPP Interim Final Rules”). 



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