In this week’s Monday episode (June 22, 2020) of the Town of Plymouth’s “COVID-19 Daily Update,” Heather reported that there was a lot of movement in various initiatives over the past week. The SBA finally updated their website to include the new PPP loan forgiveness application, as well as the EZ version of the application. The updated PPP loan forgiveness application allows business owners to make the distinction between whether they will be using the original 8-week period or the new 24-week period. While the new EZ version is shorter and more straightforward, it is not based on the size of your loan; rather, it is based on whether you are self-employed and have no employees. So it only benefits a narrow group of businesses.

The SBA also made further clarifications that will be important to small businesses, particularly S-corporations. For example, there had been a question as to whether or not an S-corporation shareholder could include their health insurance as part of a qualified expense. The SBA’s position is that no, health insurance cannot be included as a qualified expense, which is in contrast to employers’ ability to include health insurance for employees. Also, while the new law says that the loan term for unforgiven expenses can be expanded to five years, most people don’t realize that the loan term can only be changed through joint agreement with the lender; it is not automatic.

Additionally, the new law further clarifies how to apply the 24-week rule to owners’ payroll costs vs. employees’ payroll costs, which has now been added as part of the loan forgiveness application. If the payroll costs are for employees, the forgivable loan portion will cover 24 weeks of their salaries, capped at approximately $46,000 per employee. So employers can end up having a lot of employee payroll costs covered. Previously, the SBA had limited forgivable employer payroll costs to $15,000 so that employers wouldn’t take advantage of the situation to increase their pay. The SBA has now stipulated that owners can have up to 2.5 months of employers’ annual 2019 income forgiven. For those who make more than $100,000 per year, the cap is $20,833.

For businesses that have not yet obtained loans, there is still money available. There’s been discussion about extending the date that businesses can submit an application, but as of right now, the last date to apply is still June 30, 2020.

There is still an unanswered question as to whether the expenses that the PPP money is used for will be considered deductible. There is bipartisan interest in passing a bill that will make such expenses deductible, but if the bill is not passed, businesses with PPP loans should be prepared to pay a lot of extra tax, since their income will be considered to be artificially inflated through loan monies.

The Massachusetts DUA has sent out a letter to employers regarding the national level of unemployment fraud. The letter tells employers how to look at the monetary determinations in their account and find out if any of their employees have been affected by this fraud. If one or more of their employees’ identities have been compromised and someone else has claimed unemployment in their name, it is the employee(s)’ responsibility to handle the situation since it is related to their identity.

Next Monday will be the last time Heather appears on the show to provide updates. Tune in next Monday at noon on the PAC-TV community channel and Plymouth government channel (Comcast 13 and 15, and Verizon 43 and 47), or online at PAC-TV’s streaming channel. You will have the opportunity to ask questions via email. The email address will be shown onscreen during the PAC-TV broadcast.