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PPP Loan Forgiveness



With the Country facing an unprecedented health and economic crisis, and as we are sure many are aware of at this point, Congress has passed the CARES Act which not only provided direct payments to most American Citizens, but also allows many small business, such as those run by many of our long-time and valued clients, to apply for loans under the Payroll Protection Program. Colloquially deemed “PPP”, this program earmarks billions for small to medium-sized businesses to ensure that they are able to keep as many employees on the payroll as possible for as long as possible while local and state governments do their part by forcing many businesses to close. While these funds are intended to be grants from the government, Congress has set certain restrictions on how the funds may be used. If these regulations are not reviewed carefully, the business owner is at risk of being required to repay the funds which, in some instances, could be hundreds of thousands of dollars.


PPP Loans, after an application process where the business owner certifies as to the economic necessity of these loans, are provided for up to eight (8) weeks of eligible payroll at two and a half times what the businesses payroll near this time last year. These loans are forgivable, meaning the business will not be required to pay them back, but only if certain criteria are met which include, that at least 75% of the funds must be used towards payroll and the number of employees on the business’ payroll must be maintained (with an exemption for re-hired employee). In a recent FAQ released by the Small Business Administration, it was clarified that the regulations also provide for a reduction, in lieu of total forgiveness, is also possible if some furloughed employees refuse to return. While each situation differs based upon the specific facts and circumstances of your business and your needs, the government has taken steps to protect business, as well as individual employees in what has become an extremely uncertain time. While this article is intended to provide guidance, and does not seek to offer legal advice or create an attorney-client relationship, we are happy to consult with any business on owner to navigate the current times and to assist in any current, and future, business needs.


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