PPP Changes-that will put the money in the hands of the business owners who need it

Uncategorized Jun 03, 2020

The Payroll Protection Plan (PPP) has been in effect since 4/2/20. The first round of money went really fast and it appears to have gone largely to large companies that should not have received the money, in my opinion. Thankfully, more money was released and the small businesses that actually fit within the intent of the program were able to receive the money.  Great News!


Quick backstory:  PPP is the government aid program that is providing money to small businesses for 8 weeks of payroll + a little extra for rent and utilities.  This money starts out as a loan but if you can meet the requirements for forgiveness a portion if not all of it can be turned into a grant which will not have to be repaid. You have exactly 8 weeks from date of funding to use the money.  Great idea but there are a few problems.


First of all, it was good that the program was implemented quickly,  but it was implemented before there were guidelines in place. So as an accountant, it has been quite a nightmare to track and advise our clients.


Every time I sit down to write and email about the status, there is a new change. Who needs to binge watch Netflix when I can read daily updates by the SBA?

3 weeks into the 8 week program, the SBA finally came out with the official forgiveness application with the details of what is required to apply for the loan forgiveness.  Holy Heck! It was an 11 page application! This was a way more complicated form that was expected or necessary and required us to redo our tracking spreadsheet again.


Although the rules have been constantly changing, there were  2 basics of the program that have been held constant since the beginning. 

  1. Money needed to be used in 8 weeks from time of funding
  2. 75% had to be used for payroll and no more than 25% can be used for rent/ utilities.

With everything changing thank god there were a few constants.  Or were there??


Late last week these ‘constants’ were in fact dramatically changed.


These changes needed to be made, but think like an entrepreneur and act fast! Why did it take 6 weeks to figure out these were major issues for many small businesses.  


Now small businesses will have up to 24 weeks to spend the PPP money on payroll (which is brilliant because some of my small business clients are 4 weeks into their loan and they are not even open)


They have lifted the requirement that 75% has to be used on payroll.  The new requirement is 60% on payroll and 40% on rent or utilities.  Small businesses have changed and their needs have changed. They may have less payroll needs in the next few months yet still have costs that need to cover.


The SBA has also changed the loan period for the unforgiven portion from 2 years to 5 years and the date for them to return to their FTE count from 6/30/20 to 12/31/20.


If you would like to read more on these developments here are a couple relevant stories, story one and story two

Still have questions?  Send them my way, helping small business owners is what I do!



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