Apr 29, 2020
Posted Under: COVID
This information is not intended as legal advice. It is current as of April 29, 2020.
Tips for borrowers:
- Keep clear and thorough records of both the receipt and expenditure of all PPP and/or EIDL funds.
- Track PPP and EIDL funds separately. Note, they cannot be used for the same expenditures. (For example, you may use them both for payroll, but for different employees, or over different time periods.)
- Record funds as a loan until any applicable forgiveness has been awarded.
- Separate all PPP/EIDL expenditures into their own category/class/job. This will allow for easy reporting when it comes time to file the necessary paperwork for loan forgiveness.
- There is talk of legislation requiring an audit for borrowers receiving more than $2 million. Nothing has been finalized regarding audits, but it is one more reason to keep clear and distinct records for all PPP and EIDL funds.
- The guidance on PPP forgiveness is still being written by the Small Business Administration; there are no answers yet to many forgiveness questions.
- Stay in touch with your lender if you intend to apply for forgiveness. The SBA will rely on lenders to facilitate the forgiveness process using guidance now being written by the SBA.
- If you received both a PPP loan and the EIDL advance, the amount of the PPP loan that could qualify for forgiveness will be reduced by the amount of the EIDL advance. (Example: You received $50,000 in PPP funds and a $5,000 EIDL advance. Only $45,000 of the PPP loan will be considered for forgiveness.)
- There are no pre-payment penalties for either loan program. If you find you will not need all the loan funds or are unable to spend them within the 8-week period (PPP) to be eligible for forgiveness, you may repay the funds not needed or used.
You can find more information at the links below:
Department of Treasury: PPP Borrowers Info Sheet
Department of Treasury: PPP Borrowers FAQ
SBA: EIDL Information