May 13, 2020; Journal of Accountancy
The Small Business Administration announced yesterday that it does not intend to review Paycheck Protection Program loans amounting to less than $2 million, cumulatively totaled across affiliates. Those under this amount will be assumed to have met the certification requirements according to Question 46 in Treasury’s Q&As related to the PPP.
Until now, the lack of explicit guidance had been making many nonprofits—who were counting on the forgivability of the loans—nervous enough to consider not using and returning the funds.
Eight weeks’ worth of expenses are eligible for forgiveness, starting from the date that the loan was originated, in the following categories: payroll costs, payment of interest on any covered mortgage obligation, payment on any covered rent obligation, and any covered utility payment. For more on this, you should come to NPQ’s webinar this afternoon on management of these loans.
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The SBA has determined that PPP loans below $2 million will not be reviewed “because borrowers with loans below this threshold are generally less likely to have had access to adequate sources of liquidity in the current economic environment than borrowers that obtained larger loans.”
This safe harbor will also promote economic certainty as PPP borrowers with more limited resources endeavor to retain and rehire employees. In addition, given the large volume of PPP loans, this approach will enable SBA to conserve its finite audit resources and focus its reviews on larger loans, where the compliance effort may yield higher returns.
Again, all of the pertinent information will be reviewed this afternoon at 2:00 pm. The webinar has 5,000 registrants already, so sign up now and come early to get a seat!—Ruth McCambridge