Unfortunately, the fluid situation regarding the COVID-19 epidemic has left many, including congress, reacting at a pace that may have been too slow to impact the spending of the PPP funds some businesses received prior to this latest amendment to the PPP loan program. There are likely quite a few employers that have met the 8-week requirement and spent their funds who will now not have the ability to take advantage of these extensions.
Congress has now passed reforms headed to the executive for signature.
The Bill:
- Extends the eight-week period for spending to 24 weeks or the end of 2020, whichever occurs sooner.
- Increases the two year loan term to five years for most applicants awarded after the passage of the amendment.
- Changes the non-payroll expenses cap from 25% to 40% for achieving maximum forgiveness.
- The full-time-employee rehiring criteria that would have cut the loan forgiveness has been augmented so now, the forgiveness will not be reduced where the employer shows it is unable to rehire the employee, is unable to hire a similarly qualified employee before December 31, 2020, or shows it cannot return to the same level of business activity as prior to February 15, 2002 due to new standards for sanitation, social distancing or other safety requirements.
- Tax deferment is now available to PPP borrowers.
We’ll post a more thorough analysis once the bill is singed and regulations get produced.