PPP Legislative Update

06/4/2020
Great news! Last night the Senate passed the House version of the latest Paycheck Protection Program legislation and the President is expected to sign it. While it will take a few days for us to digest the full implications, and even longer for the SBA and Treasury Department to issue new guidance, we do know a few things:
 
  • You can now choose to extend the 8-week period to 24 weeks. This change is to provide flexibility to make it easier to achieve full forgiveness. We await guidance on how this specifically impacts the calculations.
  • You now have until December 31, 2020 to restore workforce hours and pay rates to the pre-pandemic levels to avoid reductions in forgiveness. This deadline was previously June 30, 2020.
  • Two new exceptions are now provided for not restoring workforce hours: (1) inability to find qualified employees, and (2) inability to restore operations to February 15, 2020 levels. We await guidance on how that is documented.
  • The requirement to spend a specified percentage on payroll costs drops from 75% to 60%. However, the 60% is a now cliff, meaning that at 59% nothing is forgiven. Previously, not achieving the specified percentage meant a gradual reduction in forgiveness. Some in Congress have already come out about issuing a technical correction to bring this back to a gradual reduction.
  • The loan now extends to five years at 1% for new loans. If you already signed loan documents, you can still have a five year period at 1% interest, but only if the lender agrees to it.
 

 

Based on this new information, our advice is to consider holding off on giving bonuses to staff or having them work extra hours solely for the purpose of achieving loan forgiveness. Over the next few weeks we hope to get more guidance so we can deliver more specific advice.
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