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Paycheck Protection Program: What Do I Do Now?

If you are anything like me, you are sitting there feeling overwhelmed by the Paycheck Protection Program (PPP). When the CARES Act was passed on March 27, 2020, it was a sprint to understand Section 1102 – PPP. Then it was a mad dash to the bank to get the application filed before all the money ran out.

As I write this article, that date was approximately five months ago. I can’t believe it’s been that long since this process started. Since the CARES Act, we’ve had multiple clarifications from the SBA and Treasury that seemed to come out on a daily basis!

In July, there was the passage of the Paycheck Protection Program Flexibility Act of 2020, which yet again altered guidance we thought we knew.

For those of you that watch “Songland”, the PPP process has been like starting with the artist’s version of a song, only to have everyone else re-write the lyrics, melody, chorus and hook. Eventually it no longer looks like how it started.

This article will briefly summarize where we started, where we are now and what you should be doing now, to hopefully bring some peace to this very stressful process.

Where are we now? For the following key pieces of the PPP, this article shows how the CARES Act started “Then” and how either FAQs or new legislation subsequently changed the law as we know it “Now”.

Loan Maturity

  • Then – The CARES Act stated maturity of PPP loans shall have a max term of 10 years
  • Then #2 – The SBA FAQs stated a 2-year maturity
  • Now – For any loans taken out after July 5, 2020, the loan maturity period is 5 years. If you had a loan prior to this date, you are eligible to work with your lender to modify the term to 5 years. Most banks are waiting to see how the borrower’s forgiveness calculation looks before they will modify.

Covered Period

  • Then – A company had 8 weeks, subsequent to receiving proceeds, to spend the money on qualified expenditures.
  • Now – A company has 24 weeks, subsequent to receiving proceeds, to spend the money on qualified expenditures.
    • If you received your PPP loan prior to July 5, 2020, you can elect an 8- or 24-week period.

Loan Deferral Period

  • Then – A lender could choose a period of six months to one year from loan proceed date, to defer payment of principal and interest.
  • Now – A borrower isn’t required to pay principal and interest until the earlier of: 1) the date on which the amount of forgiveness, as determined under CARES Sect 1106, is remitted to the lender; or 2) 10 months after the end of the loan’s covered period (8 or 24 weeks).
    • Clarification – Borrowers with PPP loan dates prior to July 5, 2020 shouldn’t assume this automatically applies. We recommend you contact your bank. Most banks are waiting to see if the loan will be forgiven before they modify any agreements.

Employee Re-hires

  • Then – If a company began laying people off between February 15, 2020 and April 27, 2020, then the company’s headcount had to be restored before June 30, 2020.
  • Now – If a company began laying people off between February 15, 2020 and April 27, 2020, then the company’s headcount has to be restored before December 31, 2020.
    • There are now additional exemptions to this requirement:
      • If a company is unable to rehire the same individuals as hired on February 15, 2020
      • If a company is unable to rehire similarly qualified individuals before December 31, 2020
      • If a company is able to document an inability to return to the same level of business activity as such business was operating before February 15, 2020, due to compliance with requirements established from various health organizations related to the maintenance of standards for sanitation, social distancing or any other worker/customer safety requirement related to COVID19.
        • There has been no further clarification on how the decrease will be measured, or if you need to have a minimum decrease in order to qualify, or how this applies to seasonal businesses.

Minimum Payroll Requirement

Then – A company had to spend at least 75% of their loan proceeds on payroll costs.

Now – A company has to spend at least 60% of their loan proceeds on payroll costs.

Delay of Payment of Employer Payroll Taxes

  • Then – A company was not eligible to delay payment of employer payroll taxes if they received a PPP loan.
  • Now – A company can now delay payment of employer payroll taxes through December 31, 2020, even if the company received a PPP loan.

The above illustrates some of the significant changes over the PPP loan forgiveness guidance. The following are some of the biggest additional clarifications that have come out in the month of August 2020, as it relates to forgiveness questions:

  • Vision and dental benefits can be included in group health care benefits and insurance premiums to be paid with PPP funds.
  • Payroll costs include all forms of cash compensation pay to employees, including lost tips, hazard pay, lost commissions, bonuses, etc. Note that forgivable cash compensation per employee is limited to $100,000 on an annualized basis.
  • Payments of interest on business mortgages on real or personal property (such as an auto loan) are eligible for loan forgiveness. Interest on unsecured credit is not eligible for loan forgiveness because the loan is not secured by real or personal property.
  • If a lease that existed prior to February 15, 2020 expires on or after February 15, 2020 and is renewed, the lease payments made pursuant to the renewed lease during the Covered Period are eligible for loan forgiveness.

While we understand that everyone is in a rush to put this program behind them, to get the loan forgiven and move on, we are encouraging everyone to be patient. There are still clarifications needed on the forgiveness guidance. Also, the SBA and the banks are still beta testing their forgiveness portals, and who wants to be the first one to beta test this important process? Lastly, Congress is still discussing a possible automatic forgiveness to loans under either $100,000 or $150,000.

There is no reason to rush to get all the information gathered, documented and filed, if it can be automatically forgiven at the end of the day. As most people are stating, it was a sprint to get the loan; it will be a marathon to get it forgiven. So, put on your running sneakers, play some John Legend and make up your own lyrics to pass the time. As your trusted advisor, we will let you know when it is a good time to file for forgiveness.

Nicole Teska, CPA, is a Partner at Bowers & Company CPAs. Reach her at 315-234-1169 or

Bowers & Company CPAs aims to offer helpful information to our clients and friends. Learn more about how we can help should your business need accounting and financial services.

Disclaimer: To ensure compliance with requirements imposed by the Department of Treasury, we inform you any U.S. federal tax advice contained in this document or video is not intended for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.

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Nicole Teska

Nicole Teska

Nicole Teska, CPA, CFE, is a Partner at Bowers & Company CPAs PLLC. Reach her at 315-234-1169 or

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