Businesses should apply now for Paycheck Protection

Written on May 01, 2020

OSCPA staff report

The U.S. Treasury late Thursday issued interim guidance for the Paycheck Protection Program, and small businesses can – and probably should – begin applying immediately.

The information is welcome news for Ohio businesses and the CPA profession, said OSCPA Executive Vice President Laura Hay, CPA, CAE.

“The CPA profession advocated with Congress for speed and simplicity to get these funds in people’s hands as soon as possible so small businesses can weather this crisis,” Hay said. “If these loans are spent on things like payroll and rent, they do not have to be repaid,” Hay said “So, they are effectively a grant; they are not taxed.”

Hay noted that because the unemployment system is handling a massive number of applicants, going that route is a time-consuming hardship for workers.

“We encourage small businesses – and CPAs to advise their small businesses – to apply for these to cover payroll rather than furloughing staff.”

The Paycheck Protection Program, which offers $349 billion in forgivable loans to small businesses nationwide, is part of the $2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act. The interim final rule released Thursday lays out additional implementation guidelines and requirements, provides greater clarity on several issues and changes the interest rate on loans made under the program from 0.5% to 1% to encourage banks to participate.

Related:

Read the guidance (PDF)

Accounting Today: SBA issues details for Paycheck Protection Program loans

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