Paycheck Protection Program Update

Paycheck Protection Program (PPP) Update

Additional Funding

Today, the US House of Representatives is expected to approve a $484 billion bill primarily aimed at replenishing the small business relief package initially created by the CARES Act. The funding is expected to be allocated as follows:

  • $310 billion supplement to replenish the SBA Paycheck Protection Program (PPP)

    • $60 billion of this amount is ear-marked for small, midsize, and community lenders

  • $60 billion to further fund SBA Economic Injury Disaster Loans and Grants

  • $75 billion in additional funding to hospitals

  • $25 billion to fund an expansion of testing capacity nationwide

Due to the high demand of the PPP program, along with the number of applicants who have already submitted unfunded SBA loan requests, the funds are expected to be exhausted within a few days.

Loan Forgiveness 

Borrowers and lenders continue to have many questions surrounding the forgiveness provisions of the PPP loan program. Previous interim rulings suggest the SBA will issue further (and much needed) guidance on loan forgiveness, which is expected to be no later than April 26, 2020. We realize some borrowers have already received funding and, as a result, their 8-week period for incurring forgivable expenses has already commenced. Our basic recommendations, which are subject to change following further guidance from the SBA, are as follows:

1.    Ensure at least 75% of loan expenses are used to fund payroll costs and related qualifying expenses.

2.    Maintain employee headcount and individual salaries at normal levels to the extent possible.

3.    Avoid commingling PPP loan funds with normal operating funds. Until further guidance is released, we believe the most conservative approach at this time is as follows:

  • Place the PPP loan funds in a separate account, 

  • Make disbursements directly from the PPP loan account where possible, 

  • Make transfers from the PPP loan account into the operating account as forgivable expenses are incurred and/or paid (where direct disbursements aren’t practical), and

  • Maintain detailed supporting documentation that supports each transaction and transfer made.

4.    Generally, the minimum supporting documentation that should be maintained is as follows:

  • Individual payroll journals detailed by employee throughout the 8-week period,

  • Support and proof of payment for employer-paid health insurance and retirement payments,

  • Support and proof of payment for other allowable uses such as rents, utilities, and mortgage interest payments, 

  • Quarterly payroll tax filings (if/when available), and

  • Final package for submission to the bank that provides for simple and efficient reconciliation between the supporting documents and the amount requested for debt forgiveness.

5.    Contact your banking representative or loan officer to discuss any additional requirements related to your PPP loan.

We plan to conduct a webinar and provide additional resources to assist our clients in navigating the loan forgiveness process after final regulations are released by the SBA. In the meantime, please contact your Faulk & Winkler advisor for further assistance in calculating and tracking forgivable expenses.  

Sincerely,

Faulk & Winkler, LLC

Baton Rouge, Louisiana

COVID-19Lainey Eddlemon