PPP LOAN FORGIVENESS UPDATE

On June 5, 2020, the Paycheck Protection Flexibility Act was signed into law, which will make it easier for many businesses to spend PPP funds in a way that is forgivable. Specifically, the PPPFA:

Changes the breakdown of 75%-25% payroll to non-payroll expenses to 60% - 40%.
Extends the covered period from 8 weeks to 24 weeks, but permits the borrower to choose to use the originally authorized 8 week period.
Extends the deferral period for payments of principal, interest and fees to the date on which the amount of forgiveness is determined by the SBA and remitted to the lender; OR, if the borrower does not apply for forgiveness, 10 months after the last day of the covered period.
Expands the safe harbor for rehiring employees by allowing that forgiveness will not be affected by a reduction in employees if certain requirements are met:
- If you've already reduced workforce or salaries, updated requirements provide that your forgiveness amount will not be reduced if you:
  - Rehire and restore salaries by December 31, 2020 (previously the date was June 30, 2020);
  - Document that you are unable to rehire your previous employees or to hire similarly qualified individuals by December 31, 2020; or
  - Document an inability to return to your standard level of business activity due to compliance with COVID-19 requirements or guidance issued by the Centers for Disease Control (CDC) or other specific federal entities.
Extends the loan maturity minimum to 5 years for all loans originated on or after June 5, 2020. Any pre-existing loans may amend the note to reflect new maturity terms if both the lender and borrower mutually agree.
Allows borrowers with forgiven loans to defer payroll taxes.
Except for the maturity minimum, all changes apply to new and existing loans.

Loan forgiveness is not automatic. You must apply for forgiveness.

To view more content related to PPP Loan Forgiveness, please visit our PPP Loan Forgiveness Resources page.