PPP Loan Forgiveness Changes Coming
On Wednesday night, (June 3, 2020) the Senate passed the House’s Paycheck Protection Flexibility Act. This legislation, if signed, will make key changes to the loan forgiveness provisions of the Paycheck Protection Program (PPP). The President is expected to sign the new legislation.
The major changes to the Paycheck Protection Program are as follows:
- PPP Borrowers can elect to extend the eight-week period to twenty-four weeks, or they can remain at the original eight-week period. This option for Borrowers, especially for the early recipients of the PPP loan, is to make it easier for Borrowers to reach full, or almost full, forgiveness.
- The payroll expenditure requirement drops from 75% to 60%. However, Borrowers must spend at least 60% on payroll costs or none of the PPP loan will be forgiven.
- With the extension to a twenty-four week period, Borrowers can use this longer timeframe to restore workforce levels and wages to pre-pandemic levels, a requirement for full loan forgiveness. The new deadline under the twenty-four week period is now December 31, 2020.
- For those Borrowers who are not able to fully restore their workforce in order to achieve full loan forgiveness, there are two new exceptions under the new bill which will allow them to attain full loan forgiveness. This legislation, if signed, first allows Borrowers to exclude from the calculations employees who have turned down good faith offers to be rehired at the same hours and wages as pre-pandemic. The second exception allows Borrowers to adjust the calculations because they are unable to find qualified employees or are unable to restore business operations to pre-pandemic levels.
- Borrowers will now have five years to repay the loan. The interest rate is still 1%.
- Under this new bill, Borrowers can now defer payment of payroll taxes which was previously not allowed under the CARES Act.
The professionals at Bormel, Grice and Huyett are always working to stay current as new information becomes available, and we are here to help you navigate these rule changes. Please call our office at 301-953-3259 if you have any questions regarding the Payroll Protection Program.Back To List