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Also see: President Signs Paycheck Protection Program Extension Act; New Deadline Is August 8.

CPA Sample Client Letter: Paycheck Protection Program Extension Act.

(Parker Tax Publishing July 2020)

Dear [client name],

I'm writing to make sure that you're aware that Congress has voted for, and the President has signed, legislation extending the time period in which a business has to apply for funds from the Paycheck Protection Program (PPP). Under this legislation, the former deadline of June 30 to apply for a loan has been extended to August 8, 2020. As of the end of June, the program still had an estimated $130 billion in funding available

This presents another opportunity for your business to avail itself of the program. I am here to offer whatever help you might need in determining if the program would make sense for your business.

As you most likely already know, the PPP is a new emergency Small Business Administration (SBA) loan program that was included as part of the $2 trillion Coronavirus Aid, Relief, and Economic Security Act (CARES Act), signed into law at the end of March. What differentiates the PPP from other SBA loan programs is that, if certain requirements are met, a PPP loan will be forgiven on a tax-free basis, meaning that borrowers are effectively receiving a grant from the federal government - a one-time cash infusion in exchange for which they are expected to maintain employee headcounts at the levels they were at before the COVID-19 emergency.

Loan Details

The following are highlights of a PPP loan:

· PPP loans have an interest rate of 1%

· Loans issued prior to June 5 have a maturity of 2 years. Loans issued after June 5 have a maturity of 5 years

· Loan payments will be deferred for six months

· No collateral or personal guarantees are required

· Neither the government nor lenders will charge small businesses any fees

Loan Forgiveness

Loan forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease. The loan forgiveness procedure includes several measures to reduce compliance burdens and simplify the process for borrowers, including:

• Options for borrowers to calculate payroll costs using an "alternative payroll covered period" that aligns with borrowers' regular payroll cycles

• Flexibility to include eligible payroll and non-payroll expenses paid or incurred during the 24-week period after receiving their PPP loan

• Step-by-step instructions on how to perform the calculations required by the CARES Act to confirm eligibility for loan forgiveness

• Addition of a new exemption from the loan forgiveness reduction for borrowers who have made a good-faith, written offer to rehire workers that was declined

Where Can I Apply for a PPP Loan? Contact the bank or lender you do business with and see if they are making PPP loans and, if so, whether or not they are processing applications. Certain lenders are only considering making loans to businesses with which they have a preexisting relationship. If your lender isn't making PPP loans, you'll need to begin looking for a lender as soon as possible. It may take some time for other banks and lenders to become part of the program, so don't be discouraged. The main idea is to begin your search as soon as possible.

I'm Here to Help

As you can see, the requirements for calculating the maximum loan amount available can be a bit tricky. If you are interested in applying for such a loan and have additional questions or would like help in determining if a PPP loan makes sense, calculating the maximum loan amount for which you are eligible, or estimating how much of the loan will be forgiven, please don't hesitate to call.

Alternatively, if you know that you want to proceed and you have your payroll data for the past year or so handy, there's nothing wrong with getting a loan application started and giving me a call if you hit a snag. Either way, I'm here to help.

Be well and stay safe,

[Your Name, Your Firm]

Also see: An In-Depth Look: The Paycheck Protection Program Flexibility Act.

Also see: SBA Releases Complicated PPP Loan Forgiveness Application and Expanded FAQ.

Also see: A Tax Practitioner's Guide to the Paycheck Protection Program (PPP).

Also see: In-Depth: A Tax Practitioner's Guide to the CARES Act.

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