As a responsible business owner concerned about retaining your employees during the early stages of the coronavirus pandemic, you immediately applied for a loan through the Small Business Administration's (SBA's) Paycheck Protection Program (PPP). And you were fortunate to be among those who received one.
But your work isn't done. Being a responsible business owner also means following PPP instructions so that your loan will be forgiven after the mandatory eight-week period elapses. That may yet prove to be difficult.
Sorting out the Confusion
A program of this magnitude put together this quickly was bound to encounter glitches. However, as reported in the Journal of Accountancy, confusion has become so widespread that an advocacy group representing several million small businesses asked the SBA to clarify terms for loan forgiveness.
Initially, the guidance seemed straightforward: As long as at least 75% of PPP funds went toward payroll costs, the loan would be forgiven. But that message became muddled when the SBA stated that any public company with "substantial market value and access to capital markets" would have to prove a genuine economic need in order to be granted loan forgiveness. However, the SBA did not immediately clarify how that qualifier — or disqualifier — would be determined.