April 17, 2020

Paycheck Protection Program Loans: Now What?

By Michael Maksymiw, Partner, Tax & Business Services

Paycheck Protection Program Loans: Now What? Tax & Business

On April 16, it was announced that both the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) programs are out of money. So, that’s clearly bad news. The key question is: What to do next?

First – Check your application to see if you received an eTran number. If you have one of these, you have been allocated funds. That’s good news for you, and you just have to wait for the bank to disburse the funds to you, and then track your expenses (see below).

Second – If you didn’t get an eTran number, all hope is not lost. You might get one in the next few days. There are so many applications to be processed that you might be “in,” but haven’t received a number yet. Wait a few days to see if you get one. Contact your banker, too.

Third – If you don’t get an eTran number or you haven’t applied at all, act as if the loan program will be funded again. From everything we’ve seen and heard around the country, there is a feeling that there are many businesses still in need of funding that got shut out of Round 1. Congress is working on adding money to the pot. It adjourned Thursday with no new funding and won’t be able to do anything until next week at the earliest. Even still, I expect Round 2 to come. I don’t know what it will look like, but if I didn’t have a PPP loan right now and need one, I’d make sure that I’m ready to apply as soon as more funding is allocated.

What does that mean, exactly? Prepare your application. You need your average monthly payroll costs. Depending on your type of business, the information varies. There is guidance on the Treasury website: https://home.treasury.gov/policy-issues/cares/assistance-for-small-businesses.

Gather your payroll records and consult your accountant to make sure you are including the right amounts. Most importantly, contact your bank to see if it will accept applications now in the hope of additional funding. This might be a way to secure your place in line if / when Round 2 comes. Also ask what supporting documentation they want so you have it ready.

If you were fortunate enough to get funded in Round 1, now comes the critical part – loan forgiveness. This might be the most important eight weeks of accounting / recordkeeping you do. This is how turn the loan into “free money.” Spend extra time here. Get it right. It will probably be the most valuable hours you spend on your business. Track your expenses dollar for dollar and document all of them so you are ready for when the loan forgiveness application comes out. You won’t be guessing how much you’ll have to pay back. You’ll know; and if you do it right, that amount will be zero.

Marcum has a team dedicated to monitoring and tracking the loan forgiveness expenses. If you need help, reach out to us. We are ready and willing to help businesses however we can during this new normal.

Paycheck Protection Program

Many small business owners have applied for Paycheck Protection Program loans, created under the CARES Act as an incentive for employers to maintain payroll during the COVID-19 pandemic. Marcum can assist you in calculating your average monthly payroll for the loan application as well as compliance with the requirements of the loan forgiveness program. We offer interim and final field work assistance to maximize the amount of the loan forgiveness. Learn more.

Coronavirus Resource Center

Have more questions about the impact of the coronavirus on your business? Visit Marcum’s Coronavirus Resource Center for up-to-date information.