Good morning,
Tufts of German-shepherd-border-collie-yellow-lab-mix fur are now blowing around my kitchen floor like tumbleweed, even though I thoroughly vacuumed and mopped on Saturday. The dog is 7 so it’s not as if this is a new phenomenon, but I’m home all day now so I notice it a lot more! The saving grace: we never have any friends come inside our kitchen now, so no one outside the family knows that we’re slowly being taken over by shed dog hair!
Today, my brief update will touch on unemployment and the Paycheck Protection Program (PPP). A forgiveness application and guidance were finally released by the SBA over the weekend, but I recommend taking it with a grain of salt. The forgiveness provisions now seem likely to change (for the better) in the coming weeks. The information below is accurate as of 6 a.m. on May 18, 2020.
The Unemployment System Grinds On
Now that we’re two weeks out from the launch of the Pandemic Unemployment Assistance (PUA) program back on May 1, more and more claims are getting resolved, but the process remains painfully slow. If your claim has not yet been resolved, please email me and we’ll put it through the process to try to get it sorted out. That process has been taking up to a week, but it is getting many claims resolved. Additionally, if you are still looking for retroactive weekly certifications to be made available to you or waiting for your inactive claim to be reactivated, I highly recommend logging in to your account once a day to check whether the right buttons have been pressed behind the scenes to make that happen. The claimant and the legislator who flagged the claim rarely get notified by the Department when the right buttons have been pressed, so checking once a day is the quickest way to find that your issue has been resolved behind the scenes. (And please email me back to let me know when things are looking good!)
Also, please note that if you have exhausted your benefits (due to being unemployed prior to the pandemic), you’re unfortunately still in a holding pattern. Keep filing your weekly certifications. The Department of Labor will activate extended benefits programs soon (but we do not have a timetable) and those benefits will be paid retroactively. Those extended benefits will also include the $600 weekly federal payments.
PPP Forgiveness Guidance Released, But Further Changes Seem Likely
On Friday, the SBA released at least part of the long-awaited guidance and an application form for PPP forgiveness. There are additional rules still yet to be released on forgiveness as well. However, thus far the forgiveness guidance all still sticks to the initial rule requiring that 75% of PPP funds be spent on payroll over the 8 weeks following the disbursement of the loan, with further reductions to forgiveness based on headcount and salary reductions. It now seems very likely that Congress will direct the Treasury to loosen those provisions and make forgiveness more accessible to businesses that have not been able to return to normal operations. Senator Marco Rubio, the chair of the senate committee with jurisdiction over the PPP, tweeted last night that changes are needed and that “We are hoping to move quickly on this before the first wave of #PPPloan recipients reach the 8 week point.” The first PPP loans were disbursed on April 6th, which was 6 weeks ago today, so Senator Rubio’s timeline will be short indeed if changes are to be made before the first recipients reach the end of their 8 week window. Nonetheless, with a growing chorus from small businesses and lawmakers on both sides of the aisle, changes do seem imminent. In light of this, I wouldn’t spend time trying to calculate forgiveness using the application form released on Friday.
PPP Loan Amounts Can Now Be Increased Retroactively Based on Owner Income or Seasonal Calculations
Late last week, the Treasury also released a new rule allowing banks to retroactively increase PPP loan amounts for companies that received their PPP before guidance regarding partnership compensation and seasonal businesses was released. If your business is taxed as a partnership and you applied for a PPP during the first two weeks of the program, you were likely advised that partner compensation could not be considered as part of the loan amount. This was changed with guidance released on April 14, and now banks will be allowed to increase your loan amount on this basis. The same goes for seasonal businesses that applied before the revised loan amount calculation guidance was issued on April 28. Partnerships will likely be required to prepare their 2019 taxes in order to be able to apply for the additional funds and there may be a narrow window (this week?) for increasing the loan amount unless further changes are made to the rules. If this situation applies to you, I recommend reaching out to your bank or credit union today to get the conversation started.
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Now that the windows and doors of my house are open during the day, the sounds of working from home have changed. It used to be the refrigerator and heat pump fans (and the dog’s snoring) that provided the bulk of the soundtrack for my mornings. But now, I can hear an angry chipmunk chirping away and three or four different kinds of birds are singing. We have a couple of woodpeckers that add to the cacophony. Sometimes (usually in the afternoon) all the neighborhood dogs get to barking at each other from their respective physically distanced back yards. Just another little marker that time rolls on, even as we still spend lots of time at home.
Be well.
With love,
Heather
P.S. You can reach me at heather.sanborn@legislature.maine.gov.
P.P.S. You can subscribe to these newsletters at heathersanborn.substack.com.