If you are subscribed to our newsletter, you may know that under section 1106 of the CARES Act, businesses that qualify and are approved for the PPP loan are eligible for forgiveness of up to 100% of the costs incurred and payments made during the 8-week period. It is meant to cover payroll costs and mortgage interest, rents, and utilities.
In most recent news, the Treasury Department and the Small Business Administration released the Paycheck Protection Program Forgiveness Application. The document answers some questions but really seems to raise more confusion and a need for clarity.
According to the American Institute of CPAs, the recently provided resources “still do not provide enough flexibility for those who receive funds,” the institute stated. “The forgiveness application form does help address some administrative items such as providing additional clarity around ‘costs incurred but not paid’ during the covered period, which is aligned with a recommendation by the AICPA. However, major issues remain. In particular, small businesses need flexibility on when the eight-week period should start or need to have the covered period extended to more than eight weeks.”
Experts are looking for more clarity regarding how to calculate full-time equivalents for PPP loan forgiveness purposes, an alternative covered period for addressing payroll costs, how to handle expenses that are not both incurred and paid in the eight-week covered period, and what support documents will be required.
For now, we will wait to see if additional details are released to clear up the confusion.
More Resources for Businesses
At Hall & Company, we are here to assist you in understanding the Paycheck Protection Program and how to maximize your eligible loan forgiveness over the next eight weeks. Please do not hesitate to reach out to your fellow Orange County accounting experts with any questions you may have. For useful information and updates, check out our COVID-19 resources page. For more general information regarding tax and accounting news and best practices, visit out our blog.
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