New information, thoughts, and opinions about the Paycheck Protection Program continue to pop up daily, while solid regulations and guidance from the SBA and Department of Treasury are lacking. We have been working to stay up-to-date on it all to help you stay current and make informed decisions. We continue to work on staying current on all of the new details and also are working on helping keep you organized to guarantee as much as possible so that your forgiveness comes through when it is time. With all of that in mind, we have developed a few FAQs below that we will try to continue to add to as things further develop. Some are revised from before as new information is made available, and some are new. If you have anything not answered here, please let Business Services know.
If I have not applied for a PPP loan, am I too late?
Yes and no. Currently, the PPP through the SBA has been refunded by Congress, and the SBA opened to new applications. However, this time around, the SBA has limited the banks on the number of applications that are processed per hour from each bank. So far, the funds have not run out, but the banks are still working through the applications that were backlogged from the first rounds as well. If you have not applied, I encourage you to contact your banker and inquire if they are still taking applications. Many banks are still accepting applications and could give you a better idea of where you stand in the queue.
If I applied but have not heard back yet, does that mean I did not get the loan?
Not necessarily, especially if your loan is still from the first application wave and is being submitted in this latest application period. However, please make sure to reach out to the banker that was processing your application. They might have more insight.
Does the forgiveness period end on June 30th? Do I have until then to get my payroll back up to date?
No, once you receive your funds, your eight-week period starts then. June 30th was the last possible date for application. The intention of this program is to encourage businesses to bring back their staff to full-time sooner rather than later. Once you receive the loan, it is intended that you are supposed to bring back your staff to full time.
What if I do not have the sales, business, or hours to support my staff at full time now?
Whether you have the sales/work or not, I would encourage you to be creative in coming up with things for your staff to do. It does not have to be the traditional workload. You can have them do more CE, file, do callbacks, call reminders, call and check in on your patients just to see how they are doing, have them do clean up around the outside of the clinic, or have them come in after-hours and give your clinic that spiffing up you have intended to do but have not had the time to do in a while. However, the goal of this program is to have employees on payroll and not unemployment, so even if you do not have work for them to do, it is encouraged that you pay your employees anyway instead of keeping them laid off or on reduced hours.
We received the PPP money, but we have an employee that is on unemployment and does not want to return. Our understanding is that our FTE needs to be back to what it was before February 15th. Will this create an issue in getting our loan reimbursed?
The SBA released that no, however, there are stipulations. The employer must show in good faith a documented written offer of rehire, and the employee’s rejection of that offer must be documented as well. Please keep in mind that the employee’s rejection of that offer of re-employment in most cases may forfeit their eligibility for unemployment insurance. In these cases, please remember that an employee continuing to collect unemployment insurance while either receiving full compensation or being offered re-employment and declining could be considered fraud and result in penalties and need to repay the money received. Also, as an employer, knowing of an employee doing so and not reporting it to the Unemployment Office may hold you liable as well. We strongly encourage you to document your interactions with this employee.
We received the PPP money, but we are currently in the middle of a pay period. Do we need to run a separate payroll?
I am under the impression no. With payroll taxes and other liabilities related to payroll expenses, they typically are applied accounted to the pay date of that payroll. With this government-funded program, I assume it will be a similar concept that the payroll dates that are counted to your 8-week period will be the pay dates of those payrolls. They would be counting the day the funds are paid out, not accrued on a day-by-day basis.
Now I have the money from the loan, do I need to do anything differently with it?
Yes! You will need to track that money and show a trail of exactly what you spent it on. This is key to getting the loan forgiven. The process is not 100% determined yet, and each lender will be the one you are asking forgiveness from, but they have not received the guidance yet. So with the end result unknown, the best course of action is to keep extremely detailed records. It is impossible to go back in history and redo something, so make it easy on yourself and overdo it now, so you don’t have to worry about it later.
What are good ways to track the money?
There are a couple of options that all would work. We have provided a few options but encourage you to consult with your CPA on if they have a preference.
- Put the money directly in a separate account, savings, or checking and run all expenses through that account.
- Set up a class within your Quickbooks so you can tag all the appropriate expenses with the PPP class tag. Then you can run a Profit and Loss statement for just that class code.
- Create a holding account in your Chart of Accounts for these funds.
Right now, you do not know if the funds will be forgiven or not, so you can run the expenses through that account and thus track them all back to that specific money. Once you know the money has been forgiven or not, you can account for that liability account to the appropriate place in your balance sheet.
I have heard that the SBA is reviewing loan applications?
The SBA announced that they would be reviewing all loans to make sure they met eligibility requirements. They have initiated a period until May 14th that you may repay the loan and be considered to meet the criteria that you made the required certification in good faith. If you are not repaying the loan before that date and intend to keep and use the loan as it was intended, it is recommended that you document your reasoning that you met the requirements of the loan, mainly be able to be confident in your reasoning behind the application.
Are there restrictions on what I can use the money for?
Yes. 75% of the loan needs to be used for payroll costs.
Is the loan forgivable?
Yes. The amount determined for forgiveness depends in part on how much you spend in the eight weeks. The amount of your payroll returning to normal is important for two reasons. First, if you have not shown strides in returning your workforce, then based on the purpose of the program, you could stand not to have our loan forgiven. Secondly, if you do not spend as much on your payroll as you usually do, thus you do not spend the full amount you were given the loan for, not all of it will be forgiven. They will not give you extra money beyond the outline of what they are giving you the funds to begin with.