The Paycheck Protection Program (PPP) has now distributed a lot of money to small businesses.  The first round tended to be eaten up by the bigger fish, but it appears that a lot of small businesses now have the funds they deserved.  Now the problem comes in spending the money in a way that will merit forgiveness of the “loan,” which technically the PPP money is. 

A week ago the Small Business Administration came out with the application that will be used to seek forgiveness of the PPP loan at the end of the 8 week period following receipt of your PPP money.  The application for loan forgiveness is more complicated than I had hoped.  Ben and I spent most of this week studying the application and what it all means.  We are developing spreadsheets that will help, but the problem is things are still changing.

Yesterday, we recorded a COVID-19 Economic Relief Tutorial (CERT) video tutorial going through the worksheet that accompanies the PPP forgiveness application.  CERT is delivered through a series of YouTube videos, because things are changing too fast to get written materials out.  For example, today one of the points we made in the video has new rules changing what we said yesterday. 

Today, Senator Marco Rubio says he has enough votes to move the “covered period” from 8 weeks to 16 weeks.  A lot of clarification still needs to be given on the spending of the PPP money.  For example, the forgiveness application rules don’t say that you have to limit the “owner’s” pay in the covered period, but the original PPP application says the owner can’t make more than their average weekly wage in 2019.  So, although it isn’t directly in the forgiveness application rules, the original PPP application will probably apply in order to limit what forgiveness will be ultimately be granted.

The application for forgiveness requires you to retain the same number of employees that you had in one of two prior periods (you get to select which one you use) and to pay employees the same as you were paying them prior to COVID-19.  Those are the two main goals of the PPP money.

Believe it or not, spending the PPP money is going to be tricky if you actually want forgiveness of the loan.  HAVE A PLAN NOW!  Make a worksheet and figure out how you are going to spend your PPP money.  Don’t run it down to the wire and have money left over.  Make sure you spend the money for things that will qualify for loan forgiveness.  Stay to the safe things (paychecks, rents, etc.).

As soon we get more information, we will pass it along to you, but make your PPP plan now, and then let’s tweak it as we go along.