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Small businesses are struggling to keep up with all the changes, but if a bill that has passed the House of Representatives passes the Senate, changes could be made to the PPP scheme that could mean filing for forgiveness would become a lot easier.
Groups such as the Independent Restaurant Coalition have been lobbying for urgent change to the government’s Paycheck Protection Program (PPP), the financial aid for small businesses as part of the government’s Coronavirus Aid, Relief, and Economic Security (CARES) act.
The bill is expected to pass, however there is some speculation that Republicans may try to alter the current bill to bring it closer to their own failed attempts at PPP reform. Either way, it will be welcome news for restaurants, who now have the extra worry of further disruption to their business with the ongoing civil unrest across 50 states.
Apart from extending the period within which restaurants would be required to spend their loans, and the amount of which would have to be dedicated to payroll, one significant outcome of these changes would be the ease with which restaurants could apply to have the loans categorised as grants.
The bill that has to go before the Senate includes:
∙ Extending the time limit for spending of PPP funds from eight weeks to 24 weeks.
∙ Reducing the amount of PPP funds that must be spent on payroll from 75% to 60%.
∙ Extending the covered period for the loan from ending on June 30 to Dec. 31.
∙ Delaying employer payroll tax payments until the end of 2020.
∙ Waiving any reduction in loan forgiveness if a company can show that some employees refused to return to work, or pre-pandemic staff numbers are no longer required.
∙ Extending the payback period from two years to five for those not seeking, or who are ineligible for, forgiveness.
The process is intensely bureaucratic and, considering the urgency of the situation facing restaurant owners, any action to streamline the processes is to be welcomed. Currently, the only way to get to grips with changes and procedure is coming through a combination of the latest legislation and through the FAQ page on the website of the Small Business Association, which administers the program.
For those who use payroll companies the task may become immediately more straight-forward, as they can provide the highly detailed documentation and information required for a PPP loan to turn into a grant. For those who do their own bookkeeping, however, the process will remain labour intensive.
“On the forgiveness application, there’s a lot of math there, it’s intricate. It’s up there with some of the most complicated schedules on tax filings,” Gregory Fryer, partner at New England-based law firm Verrill Dana LLP and co-author of several papers on how to interpret the PPP guidelines, told Forbes.
