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[Rick Braa] PPP coverage periods — how they work and what you need to know

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Acclaimed restaurant consultant Rick Braa recently hosted a webinar answering questions and providing insights and advice into the federal Paycheck Protection Program loans and how you might want to spend them. In the first part of this webinar, Braa goes into what the coverage periods for the PPP loans are.  

Beginning by going over the coverage periods for PPP loans, Braa noted that there have been a substantial volume of loans that have been fielded under this program — with literally billions of loans and hundreds of billions of dollars spent. This has all culminated in a significant strain on government agencies, like the Small Business Administration, and serves to explain the various delays and rules changes that have come since the loan programs began. 

Your PPP loan has two potential coverage periods — a standard coverage period and an alternative coverage period. Braa said that there are advantages and disadvantages to both, and which coverage period you opt for may very well depend upon your own unique payroll circumstances. You’ll absolutely want to do your own analysis.  

For a standard or traditional coverage period, it begins when you get the loan money in the bank. From there, you have the funding date + 167 days. Payments incurred and paid in that time are considered within your coverage period, and so during that time, those payments count towards the loan forgiveness period.  

If you got a bill in April and your loan in May, if you paid your bill in May, it’d be considered included in your coverage period. 

The alternative coverage period applies only to payroll. You can choose to have your coverage period begin on the next payroll cycle. So, if you were funded on the fifth of the month but don’t start payroll until the tenth, Braa said, you can choose to start your coverage period on the tenth. Braa said that it really depends on when you pay your payroll. 

“That needs to be analyzed pretty thoroughly,” Braa said. It’s also important to note that time is a factor — you have until Dec. 31 to set a coverage period. These loans do not extend beyond the end of this year.