Critical Mission Consulting Says Update to PPP Rules Ease Concerns
SBA Extends Safe Harbor, Partnership and Seasonal Business Access, 100% Forgivable Money Still Available
By: Critical Mission Consulting, Inc.
New guidance issued May 13, met with broad relief from PPP participants, and potential applicants who may be sitting on the fence, meant to relieve PPP loan recipients confusion and anxiety, and is available from SBA at PAYCHECK PROTECTION PROGRAM LOANS Frequently Asked Questions (FAQs) and from the US Treasury website at PAYCHECK PROTECTION PROGRAM LOANS.
There are a 47 questions and answers providing updates and clarifications from the SBA. The top changes with the greatest potential impact are:
Critical Mission Consulting, Inc. President, T.J. Agresti, sad about their business clients, "[T]here is nothing that requires businesses to spend their PPP proceeds immediately. We are telling businesses, especially those planning to request loan forgiveness, to hold off on spending their loan proceeds and to wait as long as possible within the 8 week loan forgiveness period." However, some business have no choice but to spend their PPP loan proceeds to keep their business afloat. These business have no choice but to ride out the uncertainty surrounding guidance of the PPP and hope they are compliant with the final rules. Fortunately, the safe harbor for businesses who accepted under $2 million covers over 98% of Phase One loans and over 99% of Phase Two loan according to the SBA. The risks associated with taking a PPP loan may now be acceptable for many more businesses who were in a holding pattern waiting to apply.
There is still an opportunity to apply for and receive forgivable loans from PPP. The program still has $126.5 billion in funding left, according to the Small Business Administration. A careful review, with advisors, of the application requirements, and the rules on how to obtain forgiveness, if that is the goal, are a must. Forgiveness is available if you use 75% of the loan for payroll but even if you don't want forgiveness, the loan is still inexpensive capital with a 2 year term and an interest rate of 1%.
For more news and reporting on the coronavirus and how businesses can handle challenges related to the Paycheck Protection Program and the pandemic, visit T.J.'s blog page (https://www.criticalmissionconsulting.com/
Critical Mission Consulting, Inc.