Update on PPP Relief Loan Forgiveness and COVID-19 Business Planning

Preface: Sometimes the best business counsel is right in front of us, and we are so very unaware. So that “they may indeed see but not perceive, and may indeed hear but not understand, lest they should turn and be forgiven.” Mark 4:12

Update on PPP Relief Loan Forgiveness and COVID-19 Business Planning

Credit: Donald J. Sauder, CPA | CVA

The small business relief measures with the Payroll Protection Program (PPP) loans are scheduled for the long-anticipated forgiveness approvals within the week. These outstanding loans for an extraordinary era as part of the 2020 CARES Act were designed to help with workers paycheck assurance, from a $669.0 Billion business loan program.

For businesses that participated in these stimulus measures, none have received forgiveness as of October 1st. With 96,000+ applications submitted for forgiveness since the initial filing seats opened on August 10th, borrowers began to look for guidance on the forgiveness process’s complexity. Some financial institutions are suggesting that PPP loan borrowers await further pending legislative changes to this forgiveness process. The possible revisions are automatic forgiveness on loans below certain thresholds of say $50,000 or $150,000 and simplified paperwork and documentation. Of note is Treasury Secretary Steven Mnuchin’s support for this automatic forgiveness feature, although final approvals are subject to further committee discussions.

Under the current laws, the Payroll Protection Loans principal will be either partially or fully forgiven if the borrower meets the forgiveness application’s stipulations. This includes expenditures of the loan proceeds, the extent of employees kept on payroll or rehired, and employee paychecks’ stability. Certain exemptions features are also applicable.

The application process, subject to future legislative revisions, provides two options on PPP loan forgiveness applications that can be submitted to lenders. The lender then has 60 days to obtain a decision on request payment from the SBA. The SBA then has 90 days to make the payment with interest after reviewing the loan terms and conditions on what ought was owed.

Each business participating in the PPP loan relief measures must keep documentation on the PPP loan for a minimum of six years after the forgiveness date or payment date of forgiveness, whichever is later, for purposes of future SBA and inspector general review.

A business may also not deduct expenses paid with the PPP loan proceeds from loan forgiveness for tax purposes, increasing taxable income with a quasi-reimbursement feature. Furthermore, current legislation does not permit double-dipping with PPP loans and other CARES Act tax provisions such as the employee retention credit. Therefore, businesses that participated in the PPP loan relief are limited to PPP loan benefits solely for Covid-19 relief measures.

All terms and conditions of current PPP loan forgiveness are subject to legislative changes. Revisions and businesses seeking forgiveness should consult with their tax advisor and banker before making any forgiveness decisions.

COVID-19 Business Planning

Resilience amid crisis and preparing for new uncertainties of the future will help bolster expectations for the journey ahead. Appropriate insights for short-term business decisions will lead towards the right longer-term successes of your endeavors, i.e., we should work to successfully navigate Q4 2020 before we plan to arrive at any destination in Q1 2021 or say Q4 2021. Is this a foothill, and there, more monumental economic surprises ahead?

Sometimes the best business counsel is right in front of us, and we are looking at it naively and unaware.

Sharing from experience on how this relevant, I was invited to a Sight and Sound performance at Lancaster Bible College, in January of this year.

It was a fantastic presentation on the Biblical Book of “Ruth,” and a production exemplifying God’s redemption of the lost and a testament of a Biblical account of God’s tremendous power. The point of mentioning this it characterized Elimelech’s pursuit of regaining “lifestyle” in Moab vs. a dedicated trust and faith in God’s ethical power and provision to meet his family’s needs “In the Fold” right where they were, in the Land of Promise.  

For those unfamiliar with the historical record, it is about a family living in Judah’s area. Elimelech, the father, with his wife, Naomi, and his two sons, Mahlon and Chilion, left the country in time of famine and moved to the foreign land of Moab . There Elimelech died, and his two sons married. Mahlon taking Ruth as his wife, and Chilion taking Orpah. Both women were Moabites. Then, both Mahlon and Chilion, likewise eventually died. Naomi received news that the famine in Judah had lifted, and decided prudently to travel back to the Promised Land. Ruth did not heed the words of dissuasion from Naomi, accompanied her mother-in-law to Bethlehem. The two women arrived in Bethlehem in early harvest season in a state of desperate poverty…and the story continues with nothing less than God’s miraculous redemption of the families lost estate. 

This story exemplifies a worst-case scenario of the COVID-19 ear, a financial famine, resulting in its significant decisions for sake of lifestyle, work, and family. Boaz, the successful redeeming kinsman, supposedly staying in Judah, didn’t perish during the famine, nor lose his estate.

Perhaps, Elimelech didn’t need to immerse his family in the Moabite culture to prevent his families complete devastation? Or maybe Elimelech was of the persuasion his perfect insight foresaw accurately the foothills leading towards more enormous mountains on the journey with famine in Judah and that his community was about to perish forsaken from living history, requiring immediate, necessary, and substantial departure actions on behalf of saving his families estate?

Keep in the Fold

We’ll conclude concisely with this summary. Whatsoever you envision as a “Keep in the Fold” business strategy will likely help you more successfully navigate the COVID-19 business climate with the short-term decisions leading to your endeavors’ desired longer-term successes.   


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