Today, June 4, 2020, President Trump signed into law a bill that allows flexibility to small businesses that received (Paycheck Protection Plan) PPP funds.
PPP funds are still available. Last day to take advantage of PPP is June 30th, 2020. Please contact us if you need assistance applying for PPP Loan.
Key provisions of the bill
Below is the summary of the important changes to the PPP forgiveness requirements.
Extends time to use PPP funds to 24 weeks
The bill gives businesses who received PPP loans an option to extend the eight-week period to use PPP funds to 24-weeks.
Businesses now have 24 weeks since disbursement to use PPP funds and be eligible for forgiveness.
Previously, businesses were required to use PPP funds within 8-weeks period after disbursements
Allows businesses to use 40 percent of PPP funds on non-payroll related expenses
To receive loan forgiveness, businesses must spend 60 percent of PPP funds on payroll related costs. The remaining 40 percent can be spent on rent, interest on covered mortgage or covered utility payments.
Previously, businesses were required to use 75 percent of funds on payroll related costs.
Extends time to rehire employees
Borrowers can use the 24-week period to restore workforce level and wages to pre-pandemic level required for full forgiveness. Businesses have until December 31, 2020 to restore workforce and wages.
Previously, businesses had to restore workforce and wages by June 30, 2020.
Provides exemptions for business who cannot rehire all employees
This bill provides couple of exceptions allowing borrowers to achieve full PPP forgiveness even if they do not restore full employment.
- If an employee turns down a rehire offer at the same payrate and hours as before the pandemic, it will not impact PPP forgiveness.
- If businesses cannot rehire employees because of lack of qualified employees or cannot rehire due to COVID-19 related operating restrictions, it will not impact PPP forgiveness.
Previously, if businesses did not rehire employees, their PPP forgiveness was reduced proportionally.
Extends maturity for loans remaining after PPP forgiveness
The bill extends the minimum maturity for PPP loan remaining after the forgiveness to 5 years.
Previously, businesses had 2 years to pay off PPP loans.
Allows businesses that received PPP funds to delay payroll taxes
This bill makes it possible for businesses that received PPP funds to also delay payroll taxes.
Previously, businesses that received PPP funds were prohibited from delaying payroll taxes as allowed by CARES Act.