Recent COVID-19 Updates

Updated on May 21, 2020 at 8:00 a.m.

There have been several COVID-19 related updates recently that we want to pass along.

Paycheck Protection Program
On May 13th, the SBA again updated its FAQs related to PPP loans which can be found here. This update provides several favorable clarifications. Treasury previously issued guidance stating all PPP loans of greater than $2 million will be subject to a full review by SBA prior to any forgiveness being granted.

• The new FAQ document adds a safe harbor for borrowers’ required good-faith certification concerning the necessity of their loan request. Any borrower that, together with its affiliates, received PPP loans with an original principal amount of less than $2 million will be deemed to have made the required certification concerning the necessity of the loan request in good faith.
• Certain borrowers who do not meet the required certifications concerning the necessity of their loans had until May 14th to return the funds. The latest FAQ extends the date to return the funds to May 18th.
• On Friday, May 15th, the SBA released the application for forgiveness of the PPP loan. The application can be found on our website here. The release does not contain significant new guidance, but it does provide the forgiveness formula and schedules. The borrower must separately initial several representations regarding their eligibility for the loan and forgiveness. The SBA may request additional information for the purposes of evaluating the Borrower’s eligibility for the PPP loan and loan forgiveness.

Legislation has been introduced, but not passed, addressing the deductibility of expenses used to determine the forgiveness calculation of loans received under the PPP program (see our prior alert here). We are closely watching this and will update you as it develops.

Employee Retention Credit

• Taxpayers could not normally claim both the Employee Retention Credit and borrow under the PPP program. Updated information allows borrowers that repay their PPP loans to claim the Employee Retention Credit. The refundable tax credit is 50% of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by COVID-19.
• The IRS has changed its position on the eligibility of health plan expenses for the Employee Retention Credit in its updated FAQ document found here. Qualified health plan expenses paid on behalf of employees not working or receiving other wages will generally constitute qualified wages for purposes of the employee retention credit.

Please check our website or consult with your MHCS adviser for the latest updates on this evolving matter.