Wednesday night, the Senate passed the Paycheck Protection Program Flexibility Act. This bill had already passed the House in an almost unanimous vote. It now sits on the President’s Desk to be signed into law.
Because it has not become law, I have not yet been able to read it. But based upon multiple sources, the bill provides for the following…
– It extends the loan utilization period from 8 weeks to 24 weeks, or December 31, 2020 whichever is earlier.
– It changes the payroll vs. operating expenses mix on loan forgiveness from 75/25 to 60/40.
– It changes the forgiveness provisions for Full Time Employees (FTE) in the following manners
– If the borrower is unable to rehire a FTE or is unable to hire another qualified FTE to replace the one that was fired, then this particular FTE is excluded from the forgiveness equation.
– If the borrower is not able to return to a business activity level prior to February 15, 2020 due to being fully or partially shut down, then supposedly the FTE Requirement is either diminished or abandoned in loan forgiveness.
If this bill is signed into law, then it will solve several of the problems that many of you are facing in reference to the PPP Loan.
First, many of you are having extreme difficulties rehiring your lower paid employees. Most of them have filed for and received unemployment benefits. With the additional $600 per week that they are receiving under The CARES Act, many are refusing to return to work because they are making more money doing nothing than they did while working. This would relieve that issue on loan forgiveness.
Second, if you were fully or partially shut down supposedly this bill would relieve the requirement to rehire your FTE’s. This would obviously make this much more palatable to the hospitality industry.
This all begs another question. How can you possibly prove any of this on your loan forgiveness application? The last one is easy. I can certainly whip up financials for the period before February 15, 2020 and after to show a substantial difference.
But the first instance is a different matter. How can anyone prove that they tried to hire back an employee, and the employee refused work? Unless you have that in writing, you can’t. How can you then prove that you tried to hire a qualified replacement and were unable? This is obviously another instance of legislators writing an almost unenforceable and unreasonable law.
The SBA and The IRS will again need to do a clarification.
If you have not yet received your PPP Loan, then you need to get that done today. If you are behind on your paperwork then contact us today. This PPP money isn’t going to last forever.
Let me leave you with this one thought…
It’s obviously going to take a miracle to get our economy rolling again.
– 8,000 jets have been grounded by major international airlines and 90,000 pilots have been furloughed
– Cruise ships are docked and cruise ship lines are doing their best to stave off bankruptcy
– Hotels have been forced to shut down entire floors of rooms while laying off untold numbers of workers
– The convention, meeting, special events and entertainment industries have mostly come to a standstill.
– Once this actually ends, no one actually knows what percentage of small businesses will also close.
When economies depress, it takes a large impetus to get them moving forward again. No one seems to be talking about what’s next. But I would encourage you to do some thinking in this regard.
There is profit in trends.
We are going to have a difficult economy for a while. You need to position yourself in a place where there is profit rather than loss.
Either way it has been a difficult week. We started in a pandemic and ended in a riot. Take some time to clear your head. Regain your smile and put your arms around your family, letting them know how much you love them. Get ready for next week. Only whatever God you pray to has any idea what we are going to need to deal with next.
But do so knowing that we are here to help.
Accounting Solutions Ltd. stands ready to complete its mission and purpose of protecting you, your family, and your business. If there is anything that you need, whether you are a current client or not, you have but to ask. I’m here and I remain,
Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
773-267-7500
888-310-0300
www.AccountingSolutionsLtd.com
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