Friday, May 1, 2020
Latest words on the PPP Loan Program
To our clients and friends of the firm,
At the beginning of April, we shared key take-aways and tools to understand and take action on the CARES Act. We have now prepared an update of developments focusing particularly on the PPP loans – the most sought-after CARES Act program.
The initial PPP program funding of $349 billion was depleted in 2 weeks with 1.6 million loans processed, and the second tranche of $320 billion made available this past Monday is expected to be exhausted any day now with 1.7 million applications that were waiting in the queue. There is some discussion in the press about a third tranche forthcoming, possibly with different loan terms which could include the removal of the key forgiveness component. We shall see in the days and weeks ahead.
If you have successfully obtained or are now awaiting the funding of your company’s PPP loan, it’s time to establish the accounting for the receipt and use of the loan proceeds for the 8 weeks post funding. Clarification on questions about forgiveness calculations continue to be issued by the Treasury Department, and we are following those releases daily. The latest states that if your loan is over $2 million, the audit requirement is triggered. Additionally, there is some discussion that another application may need to be completed to request forgiveness, and at that time, there may be an additional certification to include the economic necessity of the loan. Reports on the additional application and certification for forgiveness are currently just speculations in legal and financial circles, so we are staying tuned into the guidance as it’s released. Once again, we will see in the days and weeks to come.
We have researched the guidance to-date, and we’re assisting clients with computations estimating forgiveness of these loans. Final computations will soon be required for submission. If we can be of any assistance to you with this important phase, please let us know. In the meantime, the link to read the most updated Treasury Department FAQ on PPP loans is HERE.
Wishing you all good health,
Claire