What To Expect If Your PPP Loan Is Audited

The SBA is expected to audit PPP loans, covering everything from eligibility to the forgiveness calculations.
This article provides background on what to expect if your PPP loan is selected for review.

SBA Provides Further Guidance on PPP Loan Forgiveness

The SBA recently updated their FAQ pages to clarify certain PPP forgiveness matters. A Journal of Accountancy article describes the updates and provides links to the SBA pages here.

IRS Provides Update on Operations

The IRS recently provided a public update regarding the status of their operations in light of the coronavirus pandemic. The page describes expected processing times, issuance of payments, recent tax notices, and alternatives to reaching them by phone for various matters.
The page can be read here.

The Journal of Accountancy provides comments on the update here.

Considering Applying For Paycheck Protection Program Loan Forgiveness?

The AICPA has published a great article providing five key reasons to delay applying for PPP loan forgiveness and why delaying may be advantageous.

The Journal of Accountancy also recently published this article that explains deadlines and items still requiring clarification before many businesses will be prepared to apply for forgiveness.

Additional SBA Guidance Regarding PPPFA Provisions Issued

The SBA has released further guidance on the application of the recently passed Paycheck Protection Program Flexibility Act (PPPFA) via a new Interim Final Rule.

This Rule explains the application of the extended 24-week Covered Period to loan forgiveness based on payroll, changes to owner compensation limits, as well as other changes made by the PPPFA.
A Journal of Accountancy article detailing the changes can found here.

“EZ” PPP Loan Forgiveness Application Available

The SBA recently released Form 3508EZ and the related instructions, a form designed to simplify the loan forgiveness process for eligible borrowers.
You must meet one of the following three criteria to be eligible to use the EZ form:

  • The Borrower is a self-employed individual, independent contractor, or sole proprietor who had no employees at the time of the PPP loan application and did not include any employee salaries in the computation of average monthly payroll in the Borrower Application Form (SBA Form 2483).
  • The Borrower did not reduce annual salary or hourly wages of any employee by more than 25 percent during the Covered Period or the Alternative Payroll Covered Period (as defined below) compared to the period between January 1, 2020 and March 31, 2020 (for purposes of this statement, “employees” means only those employees that did not receive, during any single period during 2019, wages or salary at an annualized rate of pay in an amount more than $100,000);
    AND
    The Borrower did not reduce the number of employees or the average paid hours of employees between January 1, 2020 and the end of the Covered Period. (Ignore reductions that arose from an inability to rehire individuals who were employees on February 15, 2020 if the Borrower was unable to hire similarly qualified employees for unfilled positions on or before December 31, 2020. Also ignore reductions in an employee’s hours that the Borrower offered to restore and the employee refused.
  • The Borrower did not reduce annual salary or hourly wages of any employee by more than 25 percent during the Covered Period or the Alternative Payroll Covered Period (as defined below) compared to the period between January 1, 2020 and March 31, 2020 (for purposes of this statement, “employees” means only those employees that did not receive, during any single period during 2019, wages or salary at an annualized rate of pay in an amount more than $100,000);
    AND
    The Borrower was unable to operate during the Covered Period at the same level of business activity as before February 15, 2020, due to compliance with requirements established or guidance issued between March 1, 2020 and December 31, 2020 by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to the maintenance of standards of sanitation, social distancing, or any other work or customer safety requirement related to COVID-19.