PPP & EIDL Loan Update 5/1

Covid-19
Written By The MACKEY Team

COVID-19 Daily Communications

Information accurate as of 05/1/20

PPP & EIDL Updates:

  • It was confirmed Thursday by the Treasury and Small Business Administration that on Wednesday agencies temporarily shut out big banks from the electronic loan portal used to submit PPP applications for the government’s small business relief program. The move applied to any lender with more than $1 billion in assets for an eight-hour time period that began at 4 p.m. Wednesday.  The move was to ensure access to the PPP loan program for the smallest lenders, according to the Treasury Secretary.  “The SBA and Treasury will evaluate whether to create a similar reserved time again in the future,” the agencies said Thursday.

  • The IRS on Thursday released guidance stating that expenses related to forgivable loans through the Paycheck Protection Program (PPP) won't be tax-deductible. Under the PPP, small businesses wouldn't have to repay the low-interest loan they received as long as the loan went to essential expenses such as maintaining payroll.  Usually, wages are deductible expenses and forgiven debt counts as taxable income.  But under the coronavirus relief law, the PPP loan forgiveness is not counted as taxable income. The IRS said in its guidance Thursday that expenses that result in forgiveness of a PPP loan are not tax deductible in order to prevent a "double tax benefit."   The agency cited Section 256 of the tax code, which states that deductions can't be taken if they are tied to a certain class of tax-exempt income.  If desired, Congress could override the IRS's stance by passing a law that explicitly allows the deductions.

  • Treasury Secretary Steven Mnuchin told The Wall Street Journal this week that businesses that borrow money through the federal Paycheck Protection Program (PPP) can expect to be audited before the loans are forgiven, “One of the things that will be required is you will have to show a payroll report that you actually spent the money on payroll and other items that qualify for forgiveness,” he said.  Mnuchin reiterated that the government will perform a full audit on any company that borrowed more than $2 million from PPP.  The SBA has issued $660 billion in loans that can be forgiven if borrowers use them to retain or rehire employees.  Borrowers must certify 75 percent of the money was spent on payroll.

  • The SBA website is still unable to accept new applications at this time for the Economic Injury Disaster Loan (EIDL)-COVID-19 related assistance program (including EIDL Advances) based on available appropriations funding. Applicants who have already submitted their applications will continue to be processed on a first-come, first-served basis.

  • As State economies are being test reopening, there is a growing fear by some individuals of becoming ineligible for unemployment. The U.S. Department of Labor outlines specific conditions a person has to meet to refuse to return to work. The list includes a COVID-19 diagnosis, restrictions due to childcare availability, caring for an ill family member or health "complications that render the individual objectively unable to perform his or her essential job functions, with or without a reasonable accommodation" as a result of having recovered from COVID-19.  Voluntarily deciding to quit your job out of a general concern about exposure to COVID-19 does not make you eligible for [Pandemic Unemployment Assistance], according to the DOL rule.

State and Local:

  • Nearly 93,000 Ohioans filed initial unemployment claims during the week ended April 25.

The number of new claims filed for the week was less than 100,000 for the first time in more than a month, according to the Ohio Department of Job and Family Services. Total claims filed over six weeks are 1,057,486, which is 341,974 more than the combined total for the last two years.  In six weeks, the state has paid $1.45 billion in unemployment compensation to more than 481,000 claimants. 

  • Kentucky reported 90,824 initial claims during the week ended April 25, down from the 103,548 claims filed last week, according to the U.S. Department of Labor. Kentucky has paid $991 million in unemployment compensation to more than 564,000 claimants since the virus began spreading.

Cities Offering Emergency Business Relief Programs

Business helping Business: The U.S. Chamber has launched the Save Small Business Fund, a pillar of the Save Small Business Initiative. The program provides $5,000 supplemental grants to small employers in economically vulnerable communities. 

NKY Chamber Daily: http://www.nkychamber.com/news/covid-19/

US Chamber of Commerce:https://www.uschamber.com/members/small-business

The MACKEY Team
Previous

Covid-19 Cash Flow FAQ
Next

The Prosperity Playbook is a #1 Amazon Best Seller