Friday, April 17, 2020

10. PPP Tips: Covered period vs. Forgiveness Period

"Speaking to you" today from the state that ranks fifth in the country for cases and fifith for the number of deaths per million residents. Testing remains in the bottom fifth, (read: public health crisis). Michigan also has the third highest unemployment rate in the nation, (read: economic crisis)! Telltale headline, "Detroit hospitals say they've begun storing bodies in refrigerated trucks to handle the surge."
Jamie Lopiccolo, CPA at Capocore, gives small biz advice.

With that grim reminder, it was helpful earlier this week to hear a few tips on how to operationalize your Paycheck Protection Program (PPP) loan, should your roasting company be lucky enough to get one! Yesterday we learned the first $350 billion allocated for that program has been spent. Companies are being asked to wait for congress to approve more.

It appears there are two key time periods to understand. One is the "covered period" and the other is the "forgiveness period." We attempt to clarify below:

"Covered Period": Feb. 15, 2020 - Jun. 30, 2020 is the 4.5 month period in which qualified business expenses qualify to be used for the loan proceeds. Qualified business expenses are payroll, rent, interest on loans and utilities.

"Forgiveness Period": the eight weeks that commence on the day you receive your loan funds. Let's assume you receive loan funds on May 4, so your forgiveness period will be May 4 - Jun 26, 2020. This means that qualified business expenses in this period can be reported and if approved, that amount will be forgiven. The PPP regulation states that not more than 25% of the amount forgiven can be for non-payroll expenses. In other words, prioritize using PPP funds for payroll. That is the intent of the program.

On this SBAM webpage you can find the link to a recording of a great webinar given by CPA firm Capocore, titled: "What You Need to Know About Spending & Tracking Your PPP Loan." (Presented in partnership with the Michigan Association of CPAs April 13, 2020)




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