August 30, 2020
Federal SBA, Treasury issue clarifications on PPP, EIDL programs

The federal SBA is out with new details on the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) program, providing more clarity for businessowners.

Any day with clearer guidance on the Paycheck Protection Program (PPP) or an Economic Injury Disaster Loan (EIDL) is a good day!

Recent information was just added on both, which we are happy to pass along here and have been explaining to our Florida clients who are businessowners.

How PPP & EIDL differ
First, what they are: The PPP is part of the $2-trillion Coronavirus Aid, Relief and Economic Security (CARES) Act. Under the act, created by Congress,the Treasury can use the Small Business Administration’s (SBA) small-business lending program to fun loans that are forgivable — up to $10 million per borrower. Small businesses impacted by the pandemic that meet certain criteria can use this money to fund costs, like as payroll and rent.

EIDLs, meanwhile, are loans administered by the SBA to offset the effects of the COVID-19 crisis that are not forgivable. The low-interest loans have a fixed rate with payback flexibility over 30 years.Congress created advance grants totaling $20 billion for EIDL loans — those are not required to be repaid, however.  

New FAQs added
The federal SBA and Treasury added new FAQs to the list of Frequently Asked Questions that were first released in April and August, respectively; two related to the PPP and three concern the PPP and EIDL.

The first set of new PPP FAQs state that payment or nonpayment of fees to an agent or third party is not material to the SBA’s guarantee of a PPP loan. It’s also not material to the SBA’s payment of fees to lenders. The other new FAQ also allows vision and dental benefits payments to be included in group healthcare benefits and insurance premiums eligible to be paid with PPP funds.

The three new FAQs on the PPP and EIDL, added to a list of PPP forgiveness FAQs, accomplish the following:

·       Explains how a lender can confirm the amount of an EIDL advance that will be automatically deducted by the SBA from a PPP borrower’s loan-forgiveness total if the borrower has received both EIDL and PPP funds.

·       Guides lenders in handling a remaining balance due on a PPP loan after the SBA remits the forgiveness amount to the lender, including if the forgiveness amount’s been reduced for an EIDL advance.

·       Outlines next steps for a lender if a borrower got an EIDL advance that is more than the amount of its PPP loan. (Lenders must notify the borrower when the first payment is due and loan must be repaid by the borrower before the maturity date, either two or five years.)

Kerby Accounting & Business Solutions is on constant alert for new PPP and EIDL updates. The coronavirus’ economic impact is uncharted territory for us all — we are here to help businessowners understand, apply for and access help that is available.

We welcome your questions.

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Kari Kerby

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