Congress Passes PPP Loan Forgiveness Changes
Last Night, the U.S. Senate passed the House version of changes to the PPP Loan Program. The Legislation, entitled the “Paycheck Protection Flexibility Act”, is being sent to President Trump who is expected to sign it.
The key provisions are as follows:
- PPP Borrowers have the option to extend the current eight (8) week period to twenty-four (24) weeks or they can continue to operate under the original 8-week timeframe.
- The current requirement to expend seventy-five percent (75%) of the PPP Loan on payroll has now been dropped to sixty percent (60%). There is, however, apparently some confusion between what the House intended and what the Senate passed which is that if you spent less than the current 75% required for payroll, you could still attain forgiveness up to the amount actually spent. However, the Paycheck Protection Flexibility Act appears to mandate that, if the new 60% figure for required expenditures on payroll is not met, then no forgiveness at all is allowed.
- With the new 24-week period, Borrowers now have until December 31 to restore their work force level and wages to pre-pandemic levels rather than having to meet the previous deadline of June 30.
- The new Legislation provides two (2) exceptions which would allow a Borrower to still achieve full PPP Loan forgiveness even without full workforce restoration:
- If the Borrower could not find qualified employees; or
- The Borrower was unable to restore business operations to February 15, 2020 levels due to COVID-19 related operating restrictions.
- PPP Borrowers now have five (5) years to repay the Loan instead of two (2). The interest rate remains unchanged at one percent (1%).
- The new Legislation allows PPP Borrowers to also delay payment of their payroll taxes, which was prohibited under the original CARES Act.
Hand Arendall Harrison Sale has considerable knowledge of the PPP loan program, the attendant regulations and forms required. We will be glad to work with you to make the necessary application, assist you with the loan closing process and give you specific guidance for your enterprise.