PPP Loan Management | Managing your Copier Lease through Covid-19

What is the PPP loan?

On March 27, 2020, the Paycheck Protection Program was signed into law. Designed as a direct incentive for small businesses across the United States to keep working on payroll, the PPP is meant to forgive loans as long as the business keeps employees on payroll for the eight weeks and pays payroll, rent, mortgage interest, or utilities.

This may have you wondering how the PPP affects your business and specifically how it will affect your copier and business equipment leases.

How does the PPP loan affect your Copier Lease?

The Paycheck Protection Payment Forgiveness Application (SBA Form 3508 05/20) states that personal property leases can be included in non-payroll expenses. Even if forbearance was granted by the leasing company, the amount incurred during your eight-week period should be paid.

The following are forgivable expenses under 25% of qualifying non-payroll expenses:

  • Lease payments for Copiers/MFPs and Printers
  • Lease payments for laptops, desktops, servers, and firewalls.
  • Lease payments for employee cars, delivery vans, and trucks.
  • Lease payments for forklifts.

All of the above are personal property leases and are considered forgivable under the conditions in the PPP loans.

Forgiveness of rent or lease payments for real or personal property

SBA Form 3508 (05/20) Line 3 of the PPP language states that you should enter the amount of business rent or lease payments for real or personal property during the Covered Period, pursuant to lease agreements in force before February 15, 2020.

As long as your company had the lease signed prior to mid-February, you should be covered.  Any leases signed after may not be included in this provision.

What should you do to manage your copier lease?

Continue paying your copier lease as these payments are going to be forgiven.

Does line 3 affect other office equipment? What’s included?

“Eligible nonpayroll costs. Nonpayroll costs eligible for forgiveness consist of:

(a) covered mortgage obligations: payments of interest (not including any prepayment or payment of principal) on any business mortgage obligation on real or personal property incurred before February 15, 2020 (“business mortgage interest payments”);

(b) covered rent obligations: business rent or lease payments pursuant to lease agreements for real or personal property in force before February 15, 2020 (“business rent or lease payments”); and

(c) covered utility payments: business payments for a service for the distribution of electricity, gas, water, transportation, telephone, or internet access for which service began before February 15, 2020 (“business utility payments”).

An eligible nonpayroll cost must be paid during the Covered Period or incurred during the Covered Period and paid on or before the next regular billing date, even if the billing date is after the Covered Period. Eligible nonpayroll costs cannot exceed 25% of the total forgiveness amount. Count nonpayroll costs that were both paid and incurred only once.”

This basically means that if you choose to skip the payment during the covered period, you’re ineligible for payback through the plan.

CARES Act Follow up

Every business situation is different, the best thing you can do is speak directly with your business advisor, lawyer, or banker to make a strategy that works best for your business.

Changes may come in the form of updated funding plans, like the proposed HEROES plan, or other bills. Check back here for what those changes may mean to you as they are signed into law.

We encourage you to confirm this with your CPA, bank, and/or legal counsel.

Inasmuch as equipment lease payments are forgivable ABP encourages you to keep or bring such lease payments current.

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