Firm News

June 09, 2020

Ren Cicalese Discusses the PPP Flexibility Act in the Philadelphia Business Journal

Managing partner, Ren Cicalese, CPA, PFS, CGMA, discusses the new flexibility with the Paycheck Protection Program loan forgiveness rules in the recent article, “Senate passes PPP reform: Experts weigh in on latest loan forgiveness guidelines” in the Philadelphia Business Journal. He discusses the PPP loan applicants, forgiveness rules, tax deductions, and his own experience with the loan.

 

Ren Cicalese, managing shareholder of Cherry Hill accounting firm Alloy Silverstein, said he was on a call with the American Institute of Certified Public Accountants last week discussing how PPP loans had slowed to a trickle in recent weeks after an initial spurt at the start of the second round of funding early last month. Many businesses either felt they were not eligible or the program would not make sense due to the eight-week loan period and restrictions on uses of the funds. He said the extension from eight to 24 weeks could attract new interest in the program while also helping existing borrowers.

“I spoke with a client on Wednesday and they were panicking because their eight weeks were up on Friday and they still have not reopened all the way,” Cicalese said. “I told them that the expectation was that something would be passed soon. Congress made me look really smart.”

 

In addition to payroll, utilities, rent and mortgage interest, Perate said PPP funds can be used for equipment leasing and transportation. But Cicalese said the U.S. Department of Treasury and the Small Business Administration have not defined what they mean when they list transportation as one such item. Internet service is listed as a forgivable item but there is no clarity about whether that includes cloud providers.

Another unanswered question is whether there will be a sliding scale for business owners seeking forgiveness. For example, if a business uses 50% of its PPP funds for payroll and not 60%, would it receive forgiveness for that 50% in addition to the 40% spent on utilities and rent or would it earn no forgiveness at all. Cicalese said the legislation does not address that, but he believes Sen. Marco Rubio (R-Florida) plans to fix that before Trump signs it into law.

Cicalese said perhaps the biggest unanswered question lies with an April 30 edict from the IRS which said that forgiven PPP loan amounts would not be deductible in 2020 tax returns. Nothing in the legislation passed by the Senate Wednesday addressed that issue.

Legislation was introduced in the Senate in early May to overrule the IRS and clarify that ordinary expenses funded by PPP loans are deductible. Cicalese said the expectation is that a bill will be passed in July to rectify that situation, but that is still an unknown.

 

Cicalese said the real benefit will come from those who already have PPP money. And he’s not just helping borrowers, he’s one himself. The program has helped him retain all 47 employees despite the firm experiencing a significant hit in top-line revenue.

“Morally, it was just the right thing to do,” Cicalese said. “I have some employees where they are the only one out of five in their home that is working. So extending it to 24 weeks really helps us. I don’t have to make any decisions that I don’t want to make.”

 

Follow Philadelphia Business Journal on Twitter at @PHLBizJournal for more business news regarding the surrounding Philadelphia area. Click here to continue reading the full article →

https://www.bizjournals.com/philadelphia/news/2020/06/04/new-ppp-rules-will-help-borrowers-earn-forgiveness.html

JB Financial Associates is now Alloy Silverstein.
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