The accounting firm Kahn, Litwin, Renza & Co. (KLR) hosted an
informative webinar on the US Small Business Administration (SBA) Paycheck Protection Program (PPP) on Thursday, October 29. This webinar focused on the loan forgiveness process - the performance period is ending for many borrowers. Here are some highlights that may be relevant for nonprofit summer camps:
Applying for PPP Forgiveness
- KLR advice: Apply for forgiveness ASAP if you feel you can get 100% forgiveness. If not, wait until after election to see if there are any favorable program changes.
- You have 10 months from the last day of your covered period to apply for forgiveness to avoid having to start repaying your loan.
- SBA has three different forgiveness forms based on the size of your loan and any reduction in payroll or FTEs. Check with your lending institution for the process/form to use for forgiveness.
- Forgiveness is a 2 step process. First the lender determines no, partial, or full forgiveness, and then that goes to SBA who has 90 days to approve.
- Your payroll services company can prepare a lot of documents for your application after you tell them if you are using an 8 or 24 week performance period. But check for accuracy—particularly health insurance costs.
- It can take up to 5 months from application for forgiveness to be approved.
- If your lender denies partial or full forgiveness, you can appeal to SBA.
How Much Can Be Forgiven?
- The Association of International Certified Professional Accountants (AICPA) is offering a very good and free loan forgiveness Excel calculator tool
- Payroll or FTE reductions are one of the biggest concerns regarding full loan forgiveness, but there are many scenarios in which reductions don’t reduce your forgiveness amount:
- Any reductions in staff that would have happened regardless of Covid won’t be penalized (seasonal businesses, for example).
- People who leave or reduce their compensation or hours voluntarily.
- People fired for cause.
- If you were shut down or restricted by a federal agency due to Covid, or if your customers have been impacted, those payroll reductions will not reduce your loan forgiveness. (Document this!)
- If you still have reductions that will reduce your forgiveness amount, there is an additional strategy (though this loophole could be closed at any point): You may report payroll expenses sufficiently in excess of the loan amount such that the penalty for reduced salaries or FTEs still does not bring you down below the full loan amount.
- Salary forgiveness is still capped at $100K for any individual.
- Mortgage interest during performance period is eligible for forgiveness.
- $10K Economic Injury Disaster Loan (EIDL) loans reduce your forgiveness by that much ($10K).
- Note: In the case of mergers or acquisitions, PPP loan forgiveness or full repayment must take place first.
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Written by Aron Goldman. Aron is a Mentor with JCamp 180. Aron’s focus areas at JCamp 180 include camper enrollment, recruitment, and retention. He also directs our year-long Enrollment Program. Aron also has experience working as a consultant with grassroots, regional, national, and international organizations in the areas of capacity-building, strategy, and systemic change.
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Who we are: JCamp 180 is a program of the Harold Grinspoon Foundation (HGF). Our goal is to significantly enhance the long-term effectiveness of nonprofit Jewish camps in North America. To meet this goal, we provide affiliated Jewish camps with consulting services, annual conferences, shared resources, professional development, and matching grant opportunities. Find more at www.jcamp180.org