Covenant Services

The Senate has passed and the President is expected to sign the Paycheck Protection Program Flexibility Act. The legislation changes the rules surrounding the forgiveness of the PPP loan program among other key provisions.  Following is a summary of the legislation’s main points compiled by the AICPA:  Current PPP borrowers can choose to extend the eight-week period to 24 weeks, or they can keep the original eight-week period. New PPP borrowers will have a 24-week covered period, but the covered period can’t extend beyond Dec. 31, 2020. This flexibility is designed to make it easier for more borrowers to reach full, or almost full, forgiveness. Under the language in the House bill, the payroll expenditure requirement drops to 60% from 75% but is now a cliff, meaning that borrowers must spend at least 60% on payroll or none of the loan will be forgiven. Currently, a borrower is required to reduce the amount eligible for forgiveness if less than 75% of eligible funds a...

Summary of Paycheck Protection Program Loan Forgiveness Guidance Prepared by The Groom Law Group On the evening of May 22, the Small Business Administration (“SBA”) and Department of Treasury released two interim final rules (“IFRs”) – one IFR relating to the rules that will apply in determining the amounts eligible for loan forgiveness under the Paycheck Protection Program (“PPP”) (“Forgiveness Rules IFR”), and a second IFR relating to the process under which requests for loan forgiveness will be reviewed by lenders and the SBA (“Forgiveness Process IFR”). Forgiveness Rules IFR Much of the content of the Forgiveness Rules IFR affirms concepts that were already reflected in the Loan Forgiveness Application (“LFA”) that SBA released last Friday, May 15. However, some of the highlights are as follows: Eligible Payroll Costs • Affirms that borrowers can measure payroll costs based on either the 8-week default covered period (beginning on the loan disbursement date) or an “altern...

PPP LOAN  - A LIFELINE OR JUST A STRING ATTACHED? The PPP Loan program has been a lifeline for many of our clients over the last several months. However, shortly after the program kicked off, it became mired in controversy and bad press from all the stories of large corporations receiving funding.  The immediate reaction was to add regulations that became a point of uncertainty and anxiety for many of our clients. On May 13, the SBA and the Department of the Treasury provided additional guidance in the form of a Frequently Asked Questions release (find full release  here ). In short, the SBA has created a "Certification Safe Harbor" for a business that borrowed less than $2 million. The business that borrowed less than $2 million are automatically deemed to have made the financial-necessity certification on the loan application in good faith. While this does not guarantee forgiveness of the loan, it does shelter those businesses from facing the potential penalt...

The Small Business Administration has issued an application and instructions for requesting loan forgiveness under the PPP Loan program.  The form and instructions include several measures to reduce compliance burdens and simplify the process for borrowers, including: Options for borrowers to calculate payroll costs using an “alternative payroll covered period” that aligns with borrowers’ regular payroll cycles Flexibility to include eligible payroll and non-payroll expenses paid or incurred during the eight-week period after receiving their PPP loan Step-by-step instructions on how to perform the calculations required by the CARES Act to confirm eligibility for loan forgiveness Borrower-friendly implementation of statutory exemptions from loan forgiveness reduction based on rehiring by June 30 Addition of a new exemption from the loan forgiveness reduction for borrowers who have made a good-faith, written offer to rehire workers that was declined Find the fo...

** ALL REFERENCES ARE MADE FROM THE FOLLOWING DOCUMENTS ** Official Guidance Paycheck Protection Program Fact Sheet for Borrowers Paycheck Protection Program FAQs The CARES Act Disbursement Guidance   Supplemental Official Guidance of 4/20

To: All Clients From: Steve Stoops Date:  April 23, 2020 Re: PPP Loan Forgiveness – Will my loan be forgiven?  Covenant Services is proud to have worked closely with our clients over the last several weeks to provide the level of detailed payroll reporting to secure funding under the PPP Loan program. Our Client Services team has worked tirelessly to ensure payroll reporting was provided to our clients and their banking institutions.  Many of our clients have been approved for these loans and are now faced with the uncertainty of the loan forgiveness opportunity. You are not alone, businesses around the country are scrambling to understand the requirements of the loan forgiveness element of the program.   In an effort to provide payroll details and reporting to our clients, we have created a process to help facilitate loan forgiveness compliance.  In summary, we are asking for the following information from ou...

As clients are beginning to be funded, we want to remind you what has been released from the US Treasury regarding the PPP program: The loan terms will be the same for everyone, regardless of the amount of the loan or the bank used to obtain the loan.   The loan amounts will be forgiven as long as the loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs over the 8-week period after the loan are made AND employee and compensation levels are maintained.   It is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.   Loan payments will be deferred for 6 months Any business with 500 or fewer employees may apply You are only allowed to take out one PPP loan.    You cannot apply for multiple PPP loans. You can use the loan for payroll costs (including benefits), interest on mortgage obligations incurred before 2/15/20, rent under lease agreements in force before 2/15/20, and u...

As you might have heard, the Paycheck Protection Program (PPP) ran out of funding on Thursday, April 16. While it is a good thing that many of our clients have been able to receive aid, several have not, as I'm sure many of your friends who own businesses haven't. Congress is considering a bill that will add more than $200 billion dollars to this program, but the Senate adjourned yesterday without completing action on the bill. We have sent a letter to Congress and we’re working with NAPEO, our trade association, to urge Congress to act at once to fund this program. I’m asking that you contact your Senators and Representative as well. I’ve drafted a sample letter you can use. Please fill in the blanks where appropriate and feel free to personalize the letter with your own company details. You can find contact information for each Senator here ( https://www.senate.gov/senators/contact ) and Representative here ( https://www.house.gov/representatives ). Small business is the ba...