Diversified Asset Management, Inc. – 2020 3rd Quarter Newsletter
The Paycheck Protection Program Flexibility Act (PPPFA) of 2020 modified terms of forgiveness for loans to businesses under the Paycheck Protection Program (PPP) on June 5, 2020. Since its enactment into law only 10 weeks ago, PPP started has undergone two legislative revisions. Here's a short history a business owner needs to know about PPP:
Round 1. PPP is the principal federal financial aid program for business owners harmed by the epidemic. The program is run through the Small Business Administration and was part of the $2.2 trillion Coronavirus Aid, Relief & Economic Security Act (CARES Act) enacted March 27, 2020. PPP authorized $349 billion in aid to businesses, in the form of forgivable loans, but that ran out in less than two weeks.
Round 2. A second tranche of $310 billion in PPP aid was authorized by Congress and signed into law by President Trump a month later and it s now being distributed to qualified businesses.
Cleanup. PPPFA cleans up rules and requirements of qualifying PPP loans. For example, the criteria for a loan to be forgiven was softened considerably in two key ways:
Instead of requiring a business owner to spend 75% of the loan on employee compensation and only 25% on rent, utilities and other costs specified under federal law, a business owner can spend as little as 60% on compensation and still qualify for loan forgiveness. You must use the loan proceeds for payroll, health insurance, funding an employee retirement plan, and interest on a mortgage, rent, as well as utilities.
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Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.
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