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The Current Status of PPP Loans and Forgiveness on Your Dealership by David Wiggins
Managing Tax Principal, CLA
Current Program Overview
T
he Paycheck Protection Program and its forgiveness provided incredible protection to many dealers and will likely be responsible for allowing dealerships to survive this year without devastating effects. As I talk with my dealer clients, I realize that many of them, like me, are growing very weary trying to keep up with the ever-changing rules and forms that have to be completed for this program. My hope in this article is to focus on the current state of the PPP program forgiveness, and how it will play out for most of you. I will try to keep you from having to review all the bits and pieces of information that have come out and provide you with a summary of the current guidance for this program and how forgiveness will likely work out for most of you. As you likely know, in June the PPP Flexibility Act was signed into law. This program: Changed the covered period from 8 to 24 weeks, Changed the 75% payroll requirement to 60%
September 2020
T e x a s
D e a l e r
Changed any PPP loans not forgiven from 2 years to 5 year, and Allowed businesses to not pay employer FICA up through 12/31/20, and pay 50% of amounts not paid in 2020, as of 12/31/21 and 12/31/22. These changes were significant and should likely allow almost everyone, having received PPP loans, to have the entire amount forgiven. The 8-week covered period can still be used for people that qualify to have their entire loan forgiven by just using 8 weeks payroll and “other costs”. “Other costs” are rent payments, mortgage interest on real or personal property and utilities. Many businesses likely will not qualify for full forgiveness based solely on 8 weeks of payroll and “other expenses” unless they had worked to not lay off anyone and still incurred significant “other expenses”. If you don’t qualify based on the 8-week period, you will benefit and likely get full forgiveness of the loan amounts 15
