Many businesses are still struggling after the CARES Act was passed

As the COVID-19 pandemic reeks havoc across the world, many economists have credited the Coronavirus Aid, Relief, and Economic Security, or CARES Act, with keeping many small businesses afloat. However, many small businesses are confused and frustrated trying to interpret the various aspects of this Act - specifically the Paycheck Protection Program.

While there are various relief efforts (see the SBA website https://www.sba.gov/funding-programs/loans/coronavirus-relief-options), the Paycheck Protection Program has become a lifeline for small businesses. Unfortunately, there have been numerous updates making it difficult to understand. Many small businesses are unsure how to take full advantage of the program.

One of the biggest surprises I have come across is Sole Proprietors thinking they are not eligible for this program. This belief is completely FALSE! While Sole Proprietors may not have employees/payroll, they can still file a claim based on the income reported on their Schedule C.

Now comes the arduous task of completing the PPP Forgiveness Application. There have been several changes, so many in fact that many banks are still not accepting Forgiveness Applications. In general, PPP Loans are forgivable if your business used at least 60% of the loan for eligible payroll costs over a span of 24 weeks. There are also new eligibility requirements including mortgage interest, business rent and utilities and other non-payroll costs.

Applying for forgiveness is a vital step for small business survival. While there is ongoing confusion and changes to the PPP program, determining if your business qualifies for PPP loan forgiveness is required. It is estimated that completion of the PPP Forgiveness Application will take up to 15 hours. In addition the impact of loan forgiveness on 2020 business taxes is still in a state of flux.

Some small businesses are eager to apply for loan forgiveness, but others are taking a wait and see approach. We are evaluating the unique situation of each of our clients in order to help them navigate this entire process to ensure they achieve forgiveness whenever possible. The bottom line is that loan forgiveness must happen as intended - sooner rather than later. We cannot saddle struggling businesses with debt they can’t sustain.