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Paycheck Protection Program Update for 4/3/2020

April 03, 2020

Last night the SBA issued their interim final rule with regard to the loan submission process. Today in our daily update we want to share with you our takeaways from this document.

1. The rate has increased from the originally anticipated .5% to 1%. Although it is an increase, it is obviously still well below market rates.

2. Although we are still awaiting clarification for exactly what is and is not included in the payroll calculations, the new interim rules clearly indicate that payments to independent contractors will not be included. They will need to do their own submissions for loans.

3. The SBA did not provide any additional guidance for what information will be required with regard to the loan forgiveness calculations. In fact, the interim final rule specifically indicates that more guidance will be forthcoming.

4. The interim final rule is also extremely clear that once you apply for a PPP loan, you will not be able to submit an application for a second one. With that in mind, our advice (as well as that included in the rule) is that you request the maximum amount that you are eligible for. You do not have to take the funds if you later decide otherwise.

5. For more guidance, perhaps the best summary for borrowers is located at https://home.treasury.gov/system/files/136/PPP%20Borrower%20Information%20Fact%20Sheet.pdf

We are aware that some banks are currently not processing applications for the PPP loans. However the SBA has indicated the funds will be released on a first come first serve basis. Although we continue to look for further clarity with regard to items such as the method of calculation for payroll, included vs. excluded payroll costs, and calculating full-time equivalents we are moving forward with processing all the information currently being requested by the financial institutions. Should the SBA further clarify the rules, we will be prepared to make any changes necessary. In the meantime we will move forward preparing the data requested for submission based on our interpretation of the existing guidelines.

On another note, although there has been some discussion that lenders are concerned that the allocated funds for this program will evaporate quickly, we are optimistic that the Treasury will seek additional funding from Congress if that were to happen. This of course cannot be guaranteed, but we also don't see making this a mad rush with inaccurate applications as being productive and helpful for the economy.

We will continue to monitor these application rules and regulations and we will work diligently to allow you to submit your applications quickly, yet accurately.

With offices in Williston and Rutland, Davis & Hodgdon Associates CPAs is now assisting small business clients across Vermont by handling their loan application. We are providing clients with peace of mind as we navigate through this crisis and the constantly evolving business environment that is becoming our new normal. For more information about the COVID-19 business response services now available call our office at 802.878.1963 (Williston) or 802.775.7132 (Rutland) today.