The federal loan stimulus for small and midsize businesses—the Paycheck Protection Program (PPP)—offered the promise of benefits for businesses hit by the pandemic, including forgiveness loans. Now, if only business owners could decipher the rules.

Guidelines for forgiveness, updated endlessly by the U.S. Treasury Department and the U.S. Small Business Administration as Congress wrangles with deadlines and regs, continue to buffalo businesses that just want to know how to qualify for not repaying loans.

“An application for loan forgiveness is more complicated than I imagined,” said Jere Doyle, estate planning strategist at BNY Mellon Wealth Management in Boston. “I spent an entire afternoon trying to understand how the application worked and was still confused.”

Originally, the PPP pledged to forgive loans if a borrowing company avoided layoffs and used three-quarters of the money for costs such as employee payroll, among other conditions. Borrowers swiftly began reporting that calculations and other details of forgiveness were bewildering.

“How to calculate full-time equivalent employees when they naturally work fewer hours during this time of year though are paid the same salary?” said Paul Becht, CPA and partner at Margolin, Winer & Evens in Uniondale, N.Y. “The guidance appears to penalize the employer for these situations, though the employees have not been economically impacted at all.”

Edward Rigby, CPA/MST, tax partner at Prager Metis in Cranbury, N.J., said the application appears to allow non-payroll costs such as rent and utilities, along with employer-provided pension and health benefits, incurred outside the eight-week covered period to qualify for forgiveness if paid during the eight-week period.

He added that S corp owners question benefits as “owner employees,” and questions linger about family owned businesses where a spouse or adult children are employed.

“Complicated affiliation rules require businesses to consider the size standards for related companies, including foreign affiliates,” Rigby said. “Otherwise-eligible U.S. businesses with foreign affiliates had difficulty with some participating lender applications.”

Companies still shuttered by the pandemic are, according to original PPP mandates, running out of time to spend the money intended to help them re-open. “The definition of ‘covered period’ is confusing, as well as how to calculate ‘full-time employees’,” Doyle said. “It’s difficult for a small business to accurately complete the application without professional help.”

“Dealing with this legislation has proven more challenging than any tax law changes in my 35-year career,” said Robert Seltzer, a CPA at Seltzer Business Management in Los Angeles. “On the application side, we were told different things by different banks, and the rules seemed to change almost daily. I can’t imagine a layman small-business owner trying to navigate the rules.”

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