In New England, the leaves are changing, there’s a chill outside, and fall is in the air. While the weather may be changing, the SBA and Treasury aren’t making the same dramatic changes or clarifications on the Paycheck Protection Program, and winter is coming. While the program was part of a series of stimulus measures designed to get funds into the hands of small businesses in an effort to keep workers retained, the program went through a metamorphosis in the spring through a series of interim rules, FAQs, and application clarifications. During the summer months, the program remained largely untouched, capped by a release of a set of forgiveness FAQs, but little other guidance. However, as pumpkin latte season approached, we started to see new activity related to this program as follows:
While the release of these new guidelines streamlines and clarifies the process related to loan forgiveness for the smallest of the PPP loans and clarifies responsibilities and escrow requirements during a change in ownership, many major questions still remain for the large majority of PPP loan holders which make the coming of winter unusually worrisome. As emphasized in our previous article issued August 18, 2020, the same concerns regarding calculations and tax impacts still exists:
In addition to these items noted above, PPP loans listed on the financial statements of an organization that are treated under generally accepted accounting principles as loans may impact financial statement covenant calculations. Companies should start evaluating the impact of these loans on their financial statements and prepare for waiver requests or other impacts from these loans.
With all of these uncertainties, we find that patience continues to be top of mind as we hope to see some additional guidance issued by Washington soon. Some companies are filing for forgiveness as they want to leave the program behind them, but in many cases, a wait and see approach might be prudent. At this point, it may be best to start stacking firewood, hunkering down, and waiting for winter to pass. As applications are due 10 months after the end of the covered period, we know that inevitably spring is just around the corner.