Recent PPP guidance requires nuance

Written on Jun 25, 2020

By Jessica Salerno, OSCPA senior content manager 

The updated guidance on the Payroll Protection Program from the June 5 PPP Flexibility Act of 2020 means practitioners will have need to consider the different impacts this will on businesses, says one PPP expert. 

“CPAs are able to offer the best interpretation that we can of the rules released,” said Doug Houser, CPA, principal at Rea & Associates, an Ohio CPA Proud organization

The recent guidance updated the allowance for choosing a 24-week period to use PPP funds versus the original eight weeks. 

“There was a lot of applause early on for 24 weeks to spend the money,” Houser said. “But it was really before everybody thought through the nuance of it.” 

Houser said despite the additional time to spend the funds, some businesses are still suffering. If they use up that money in 12, 14 or 16 weeks and need to reduce their labor force it can impact forgiveness because full-time employee reductions are a part of those calculations. That could mean the business is going to be disqualified from a portion of forgiveness because of FTE reductions. 

“While it's a good thing that we have this additional flexibility of the 24-week period, it still requires a lot of thought and consultation,” Houser said. “You need to determine what's best for your business and where you can maximize what you're trying to do in terms of planning.” 

The time to apply for forgiveness has been extended to a 10-month window from the end of the measurement period. The concern here, Houser said, is what could happen to your business during this period and what happens if they continue to change the rules. 

“It does give some pause in terms of what do we do for planning and thinking about helping our clients with that application for forgiveness?” he said. “Or on the other hand, you may say, ‘I want to go ahead and get this thing done as quickly as possible because I'm concerned about further clarifications or rule changes that may impact the stance that I have.’” 

Additionally, there has been clarification around owner compensation related to PPP funds, so owners don’t benefit more so than they should to the detriment of employees. Houser said there previously were questions about retirement plan contributions and other areas specific to owners, with some concern people were trying to take advantage of the system. He said the clarifications addressed some of those issues. 

Practitioners have been frustrated with the process, Houser said – which is to be expected when more than $600 billion was made available over a short timeframe and some rules were written after relief was made available. 

“I think we're settling in a little bit,” he said. “Folks are taking more time to budget and project manage, not only with regard to the PPP itself, but overall, their businesses. The original panic has somewhat settled down and folks are gaining some understanding of the program.”

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