Q. For COVID-19 relief funds, what is needed to properly receive reimbursement or loan forgiveness from the government?
A. The Paycheck Protection Program (PPP) loan program has specific full forgiveness requirements, but the Small Business Administration (SBA) continues to evolve the rules. Fortunately, the Health & Human Services (HHS) distributions of $20 billion & $30 billion has clearly defined “Terms & Conditions” for each type that can be viewed here. We have broken out the most critical elements in our detailed answer below.
HHS $20B & $30B Distribution
Most of you reading this likely received your COVID-19 relief funds from these two general HHS allocations ($20B & $30B). Both distributions have nearly identical Terms and Conditions, both of which state:
- The Recipient certifies that the Payment will only be used to prevent, prepare for, and respond to coronavirus, and that the Payment shall reimburse the Recipient only for health care related expenses or lost revenues that are attributable to coronavirus.
- The Recipient certifies that it will not use the Payment to reimburse expenses or losses that have been reimbursed from other sources or that other sources are obligated to reimburse.
Expense Tracking Required
It is clear that organizations will need to carefully document from which of these funds paid for what part of your COVID-19 expenses. SHP recommends an internal tracking mechanism that outlines the following:
- PPP – record how this money was spent in accordance with the legislation to maximize forgiveness. Such as: a minimum of 75% on payroll and up to 25% on mortgage/rent/utilities).
- $20B Distribution – record how this money was utilized for non-PPP expenses. Allowable items are: lost revenue offsets, additional equipment purchases for PPE, additional office cleaning, and anything that is clearly attributable to coronavirus.
- $30B Distribution – Separate from the $20B fund, record how this money was utilized for non-PPP expenses with the same allowable items as the $20B distribution. NOTE: this cannot overlap with the records on how you spent your portion of the $20B distribution!
- Example: if you received distributions from both the $20B and $30B program, you cannot use both to pay for the same things. You could use funds from the $20B to pay for PPE, but the funds from the $30B would need to cover something other than PPE expenses.
HHS stated that there will be an additional set of reporting requirements for organizations that received a total HHS distribution over $150,000. As of this publication, HHS has not released these requirements. However, as soon as those are available, we will be sharing via an updated post.
It seems that new guidance is being issued daily, so please don’t hesitate to let us know if you have questions or need help understanding the seemingly ever-shifting documentation burden (send us a message using the form below).