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What St. Louis CPAs are advising PPP borrowers amid ever-changing rules

"The program is not meant to be 'free money,' but rather to keep workers employed and provide working capital for certain operating expenses"
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Business photo shows printed text small business loan

ST. LOUIS — With rules for Paycheck Protection program loans and their eligibility for forgiveness changing every few days, St. Louis CPAs urge caution on how businesses spend the money and the importance of documenting it.

- How the money should be spent: "Due to the continually changing guidance, we are advising clients not to spend any of the PPP money in ways they wouldn't normally spend their own money," said Jeff Sparks, a partner at RubinBrown. "A, that's in the spirit of the law, and B, if they don't end up getting forgiveness for the loan, they won't be in any worse shape than when they started."

Charlie Cameron, managing principal of financial institutions at CLA, formerly CliftonLarsonAllen, agreed. "The program is not meant to be 'free money,' but rather to keep workers employed and provide working capital for certain operating expenses," he said.

- Tracking and documenting are key: "You should be tracking and documenting all costs that would relate to forgiveness," Sparks said. "Once the final rules are out on forgiveness, that's when we will look at ways to maximize forgiveness. But track everything now."

Dan Mudd, head of the CARES Act research and response team at Anders CPAs + Advisors, said "You have to be audit ready."

In addition, Cameron said, "To maximize PPP loan forgiveness, understand the key variables that drive forgiveness, such as the eight-week time period you have to make forgivable expenditures, the allowable expenditures which are forgivable (i.e., payroll, rent, utilities and interest on mortgage debt), and the potential negative impact of not retaining your full employee workforce or lowering individual employee wages by more than 25 percent."

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