On Saturday, July 4, 2020, President Donald Trump signed a new law extending the deadlines for applying for the Paycheck Protection Program (PPP) loan from June 30 to August 08, 2020. New Trump administration guidelines that tighten eligibility, retroactively, for the much-in-demand Paycheck Protection Program loans have raised considerable worries among member companies of a major construction contractor group.
Besides the PPP application date extension, there are some other updates:
1. For people who received the loan before June 05, 2020, you can choose the applicable covered period for your loan (8 weeks or 24 weeks)
2. For people who received the loan after June 05, 2020, you are required to use a 24-week covered period.
3. The borrower can submit the loan forgiveness application form anytime between eight and 24 weeks. However, we suggest applying the forgiveness application when you have finished your payment. From the ending period covered day, you have up to 10 months for preparing and applying for loan forgiveness.
4. The cap on the amount of loan forgiveness for owner-employee and self-employed individual’s own payroll compensation has changed. The previous guidance, for some reason, capped the amount of forgiveness at a maximum of $15,385 for sole proprietors, owner-employees, and independent contractors (equals 15.38% of 2019 compensation).
The new rules change the cap on forgiveness according to the changes in the period length
If the borrower uses the 8-week covered period, the cap is 15.38% of 2019 compensation or $ 15,385 whichever is less.
If the borrower uses the 24-week covered period, the amount is 20.83% of 2019 compensation, up to $20,833.
5.You now can apply for forgiveness using the 3508EZ application form.
If you need advice or services on any aspect of construction bookkeeping, accounting and tax, our construction accounting specialists are ready to help. Get in touch with us for free quote.