PPP Forgiveness Update – Four things we know now

Many of our clients have been asking questions about the PPP loan forgiveness process. Believe it or not, the guidance is still not clear or complete, and is continuing to evolve. Here are four things we know now:

  1. Expenses. If you want forgiveness, then you need to spend the funds on eligible expenses. The eligible expenses are: Payroll costs, utilities, rent for leases in effect prior to February 15, 2020, and interest expense. Payroll costs should represent at least 60 percent of the forgiveness amount requested. If you are in one of the lucky industries that has been busier in the post-Covid environment, and payroll costs represent all or most of the costs, then this will be very good for your forgiveness prospects.
  2. Patience. There is no business reason to rush to submit your forgiveness application, especially since the regulations continue to evolve, and every evolution to date has been in favor of the PPP recipients. For example:
    1. If you had to lower your employee headcount, you have the opportunity to restore the full- time equivalent levels by December 31, 2020.
    1. The time frame for the payroll cost calculation was also expanded, from its original eight weeks to 24 weeks.
  3. EZ application. There is a simplified, one-page “EZ” application for qualified applicants. It makes sense to wait, see what your lender/bank’s application entails, and see if you qualify for the “EZ” application.
  4. Loan repayment. If for some reason you do not qualify for forgiveness, the loan balance repayment provisions have also been amended in your favor. The repayment is now five years at one percent interest.

The moral of this story is: the PPP news continues to be overwhelmingly positive. We encourage you to remain patient, wait for your bank’s application, and then reach out to us or your other trusted legal/financial advisors to help you navigate through the process.

Fournier Legal Services has been a customer-service oriented, technology-based, paperless law firm from the day we opened, and we are uniquely positioned to help our clients navigate the current environment. For any questions related to Business Law or Estate Planning, please contact us by calling 860.670.3535 or emailing info@jeflegal.com.