Partners Jeff Cronn and Drea Schmidt hosted a webinar on May 22 to help businesses navigate the most recent guidance for Paycheck Protection Program (PPP) loan forgiveness.
During a refresher of the PPP loan program, Jeff noted that Oregon businesses received 18,732 loans valued at $3.8 billion in Round 1, and 37,150 loans valued at approximately $3 billion in Round 2 (as of the most recent SBA report). He also reviewed loan forgiveness qualifications and discussed the information businesses will need to prepare for their forgiveness application.
Taking a closer look at the necessity certification provided in PPP applications, Jeff pointed out that borrowers with loans over $2 million are at higher risk of an SBA audit to determine if the certification was made in good faith. How the certification is to be interpreted in light of missing or changing guidance has been a primary focus of borrowers.
With the release of the long awaited forgiveness application on May 15, Drea was able to fill in several holes related to PPP forgiveness. She shared ways in which borrowers can maximize forgiveness for the covered period (generally the eight weeks after a borrower received PPP proceeds) through eligible payroll costs and non-payroll costs.
Acknowledging that one of the most complicated pieces of the application is forgiveness reductions, Drea gave a preview of how borrowers will need to calculate FTE and salary reductions – the biggest factors that may limit forgiveness. She also reviewed safe harbors from the FTE reduction in loan forgiveness, including for employees who voluntarily resign or who decline an invitation to return to work.
Jeff and Drea acknowledged that, while there are a number of persistent frustrations about the PPP program and the requirements for forgiveness, it’s important for businesses to continue making decisions in the best interest of the business. With additional rule changes and guidance likely, there are still a number of practical actions that borrowers can take now to maximize their loan forgiveness.
A recording of this webinar is available online. Viewers are encouraged to follow up directly with attorneys to ask questions not addressed during the hour-long program.
For this and other up-to-date information on the various legal impact of the coronavirus, please reach out to the attorney you regularly consult.
