The second round of Paycheck Protection Program funding has been open for two weeks and it appears funds are going to the intended recipients.
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The Employee Retention Credit is part of the reconstituted Paycheck Protection Program and is designed to help businesses who have been adversely affected by the COVID-19 pandemic retain their employees.
Over the past few weeks, some of our local commercial lenders have slowly begun to open their online portals to allow those businesses who received Paycheck Protection Program (PPP) Loans to file their applications to obtain forgiveness of the debt related to qualified expenses.
While the loan application process was a heated fury of business owners rushing to obtain the much needed funds so that they could continue to employ and pay their employees, retain health insurance coverage and pay their rent, the loan forgiveness process seems to be occurring at much less of an accelerated rate. Although credit should go to the Small Business Administration for issuing some guidance to the lenders who have extended these loans, not all the related questions have been answered.
Bloomberg News recently reported that according to a new survey, at least one in ten small businesses in the U.S. are expecting to lay off workers once their fiscal relief funds run out.
In another survey done by the National Federation of Independent Business, 14 percent of companies, who received a loan under the Paycheck Protection Program, anticipate having to reduce their workforce after using the loan. Among those companies, half expect to dismiss one to two employees, and 12 percent say they will likely lay off at least ten people.
Having been a CPA for over 30 years, I can honestly say that the last three months of my career have been some of the most challenging, but also some of the most rewarding.
The coronavirus pandemic has changed the way that all of us work and also how we see the world. For many years, I cherished the role of being my clients “most trusted advisor.” This meant I provided financial counsel related to income and estate tax matters and assisted in management consulting projects to help business owners maximize their profits. While all of these types of engagements brought value to the business owner, little did I know 2020 would transform my role to becoming a “front line” worker.
During the COVID-19 pandemic, the need to plan for taxes has become even more important due to all the changes from recently passed coronavirus relief legislation and especially for those businesses seeking forgivable loans through the Paycheck Protection Program (PPP).
While the PPP legislation was designed to help businesses weather the economic storm that many “Stay at Home" orders have created by providing funding to continue to employ workers and, the ramifications of not fully understanding the restrictions for use of these funds could ultimately cause further challenge for business owners.
Business owners and non-profits are strongly urged to reach out to their Zinner & Co. Client Service Team and should feel comfortable accessing information provided by our team of Recovery Specialists, not only in the Paycheck Protection Program (PPP) application process, but also in the proper documentation and accounting for loan proceeds.
Topics: Zinner & Co., Coronavirus, COVID-19, Deferring Tax Payments, Small Business, Economic Injury Disaster Loan, Federal Assistance, U.S. Small Business Administration, SBA, Layoffs, Layoff, Families First Coronavirus Response Act, Employee Leave, The CARES Act, Unemployment Benefits, Tax Credit, Economic Impact Payments, Paycheck Protection Program, Loans
The American Institute of CPAs has recommended a defined set of documents for lenders regarding the Small Business Administration’s Paycheck Protection Program (PPP) application process.
According to the Maryland Association of Certified Public Accountants, Inc., the recommendations were informed by discussions with an AICPA-led small business funding coalition and other stakeholders in the PPP process with ties to 44,000 CPA firms, 2.5 million small businesses, and 30 million employees.