Another week has gone by with very little guidance on how these loans will be forgiven.
The AICPA (American Institute of Certified Public Accountants as well as ABA (American Bankers Association) are both advocating for clear guidance from the powers that be.
My bank (QNB) sent me the attached PDF as a preliminary guide from the PA Small Business Development Center. He does caution that it is Preliminary and could (and likely will) change. PA Small Business guidance
Other tidbits we have learned this week:
- The Treasury Dept / IRS has determined that the expenses associated with loan forgiveness will not be deductible. The forgiven loan is not taxable so in the end it is a wash. this is much less of a benefit than was presumably intended by Congress... the debate begins - however at this point it does not look good for us small business owners.
- The definition of Utilities - includes telephone & Internet services that were in place prior to Feb 15th. - ok that's a win
- You must bring back employees even if you are not open
- If employees refuse to come back - get it it in writing - it will not be held against you in the forgiveness calculation but it may impact their unemployment benefits. (see Q 40 of the treasury guidance)
Below are some open questions that clients have asked that still remain unanswered:
- How will the FTE (Full Time Employee equivalent be determined?:
What time period or point in time will they look to?
What are they comparing to?
Does it have to be the same employees at the same pay level? - Is interest paid on a line of credit included in the forgiveness calculation or just mortgage interest?
this is an "acceptable" use of the funds - however it does not appear in the list of forgivable items...?? that makes sense (not) :-/ - How do we calculate pay commissioned based or tipped employees when we can't open for business?
There are plenty more where they came from - so to stay up to date - please keep an eye on these links:
- https://www.aicpa.org/interestareas/privatecompaniespracticesection/qualityservicesdelivery/sba-paycheck-protection-program-resources-for-cpas/sba-payroll-protection-program-faqs.html
- https://home.treasury.gov/policy-issues/cares/assistance-for-small-businesses
- https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Frequently-Asked-Questions.pdf
As always - if you have specific questions that we can help you with - please do not hesitate to reach out.
Have a great weekend and Happy Mother's Day!