PPP Forgiveness FYI: This is What We Know As of Today

Hope the weekend treated you well. Key topic we are talking with customers about is the PPP Forgiveness process. The information below and a link for additional data points. PPP Forgiveness FYI: This is What We Know As of Today

PPP Forgiveness: This continues to be the topic I field the most questions on. The Senate reconvened today (the House is choosing not to meet due to COVID-19), with this topic high on the agenda. Below is BMO’s most up to date information and guidance. The reality is, everyone is awaiting final guidance, so more to come.

  • Banks have still yet to receive guidance around forgiveness for the Paycheck Protection Program including both the process and calculations
  • We hoped to have guidance by now but given the challenging nature of the programs and focus on Phase II, timing of this guidance is still very much in the air and is not expected this week
  • This lack of guidance has left lenders, including BMO, with many unanswered questions and anxious clients who greatly want to meet the parameters so their loans are forgiven
  • Banks have provided the SBA with considerable feedback, guiding principles, and detailed calculations for what we would propose for forgiveness – It is uncertain whether any of this will be utilized
  • At this time, BMO cannot answer detailed questions around forgiveness, but can share provisions outlined in official guidance and direct clients to helpful pieces we have come across including a Nine Part Series by Taft – Parts Six and Eight are probably the most relevant for forgiveness
    • These continue to be updated as more guidance is received so would encourage you to check back regularly
  • To summarize the key forgiveness provisions the CARES ACT, Interim Final Rules, and authorized Department of Treasury FAQs have already outlined include:
    • Generally speaking, expenses eligible for forgiveness include Payroll Costs, Rent and Lease Payments, Utilities, and Interest Payments on Mortgages
      • These must be made during the covered period (the eight week period after the borrower receives its loan proceeds)
      • These must be related to obligations that were in existence as of February 15, 2020
      • The customer should consult its advisors for questions on whether a specific expense will be eligible for forgiveness
    • To achieve full forgiveness, 75% of the PPP proceeds need to be used to cover payroll with only 25% used for eligible interest payments, lease payments, and/or utility payments
    • Full forgiveness can only be achieved if:
      • The Company maintains its average employee count during the eight-week period after loan disbursement as compared to the comparable period last year (e.g. 2/15/19 thru 6/30/19) or prior to 6/30/20, rehires employees impacted between 2/15/20 and 4/26/20
      • The Company does not reduce any employee’s compensation by more than 25%
      • If the aforementioned parameters are not met, the forgiveness amount will be reduced ratably
  • BMO will communicate its process and requirements to clients as soon as we have received the full guidance from the SBA and have had the opportunity to digest it; we will also provide an FAQ as soon as we are able to

 

Link to HK LAW PPP FOREGIVENESS:

https://www.hklaw.com/en/insights/publications/2020/05/sba-paycheck-protection-program-loans-forgiveness-guidance

 

https://www.applecapitalgroup.com/updates-ppp-eidl-programs-sba/

Published On: August 31st, 2022 / Categories: Uncategorised /

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