A financial focal point of the Coronavirus Aid, Relief, and Economic Security (CAREs) Act, the government’s Paycheck Protection Program (PPP) has served as a lifeline for contracting firms since early 2020. Eligible firms are able to qualify for low-interest loans for up to 2 ½ times their respective payroll costs—generally up to $10 million—with no collateral requirement to help ensure payback. Many contractors have had their entire loan forgiven simply by offering proof that funds are spent on eligible costs, which primarily involve payroll. Even if loan payback becomes necessary, the 1% interest rate charged offers powerful liquidity for companies that often struggle during uncertain times. Yet other sources of funding became available to many of these firms, at the same time that the second round of PPP also became eligible for application. How can you avoid including costs paid by supplemental income streams on your PPP forgiveness applications—either Round 1 or Round 2? The short answer is that some firms keep meticulous track. Others, not so much. Still, others may not need to in certain situations. Let’s break down the top three scenarios where large and small contractors could be tempted to double-dip on contracts.
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