Long Island Food Council monthly meeting June 17, 2020 marcumllp.com
Paycheck Protection Program Flexibility Act Jim Aspromonti Marcum LLP james.aspromonti@marcumllp.com
Paycheck Protection Program Flexibility Act ► Current PPP borrowers can choose a 24- ► The June 30 deadline to restore week period, rather than an 8-week period to workforce levels and wages is spend PPP funds. extended to December 31. ► New PPP borrowers will have a 24-week ► There are two new alternatives for a covered period which cannot extend beyond borrower to restore a potential December 31, 2020. reduction in forgiveness: ► An inability to find qualified employees ► The payroll expenditure requirement is now to replace those let go, and 60%, rather than 75%. If at least 60% of loan ► An inability to restore the business proceeds are not spent on payroll costs, operations to February 15, 2020, there is no loan forgiveness. levels due to COVID-19-related ► Note that technical modifications in the future operating restrictions. could restore partial forgiveness for loans that do not meet the 60% threshold. marcumllp.com 3
Paycheck Protection Program Flexibility Act ► The PPP loan term is extended from ► Companies that participate in the two years to five years. An updated Payroll Protection Program Loan loan agreement with the bank may be program will be eligible to defer the required. company portion of payroll taxes throughout 2020. ► (Borrowers should reach out to bankers regarding loan modifications.) ► This is a change from being eligible for the payroll tax deferral only through the date a company receives loan forgiveness. marcumllp.com 4
2020 Interim Financial Statements In Process ► Consider Going Concern and future ► Current Accounting Principles Generally cash flow implications. Accepted in the US (“US GAAP”), does not specifically address the accounting by ► Recommend disclosure related to businesses that obtain a forgivable loan potential known and unknown effects from the government. of shutdowns and worker shortages. ► Each entity will need to address the ► Companies that elect to postpone uncertainties and whether to account for adoption of ASC 606 will be required the loan as debt or a grant. to adopt as of 1/1/2020. ► Entities that reflect the liability as debt will ► Impairment issues need to be need to consider extinguishment guidance considered for goodwill, intangibles of a liability. and other long lived assets. ► Entities that believe grant guidance will be ► Disclosure of PPP loans received as issued will follow the guidance of an debt. Can’t assume forgiveness. income grant. marcumllp.com 5
Questions? Jim Aspromonti Assurance Partner James.Aspromonti@marcumllp.com www.marcumllp.com/coronavirus DISCLAIMER: This presentation has been prepared for informational purposes only from sources believed accurate and reliable as of the date of preparation. It is intended to inform the reader about the subject matter addressed. This is not to be used or interpreted as tax or professional advice. Those seeking such advice should contact a Marcum professional to establish a client relationship. marcumllp.com 6
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