Paper Trails

Congress Passes Amended PPP Loan Rules

Both Houses of Congress have now passed HR 7010 – The Paycheck Protection Program Flexibility Act of 2020. The President is expected to sign the bill into law shortly.

Because many small businesses have had difficulties using PPP funds, congress as introduced relaxed rules to make it easier for small businesses to receive full forgiveness under the program. These rule changes include:

  • Borrowers now have up to 24 weeks (6 months) to use all PPP funds, instead of the original 8 weeks as originally written. The “funding date” still marks the beginning of the 24 week period. If you’ve already spent all the funds during your 8-week period (many borrowers who received funding early in April already have), you can still use the 8 week period.
  • You must now use 60% of the funds on payroll, down from 75% previously. However, in order to be eligible for forgiveness, you must use 60 of the TOTAL loan on payroll. Previously it was 75% of the “used funds.”
  • The FTE counts now apply to the 24 week period, and the “safe harbor” re-hire date has been extended to December 31st from June 30th. Meaning that most employers should have no problem qualifying for FTE counts going forward.
  • There are further exceptions to the FTE count if you are unable to hire employees back, find qualified employees or could not restore your business to pre-pandemic levels. These are further loopholes to help small businesses qualify for forgiveness.
  • The repayment period for PPP loans not forgiven has been extended to a 5 year term from a 2 year term.

You can read the full text of the bill here.

We’ve hired you to prepare our PPP Forgiveness application – What’s changing?

At this point, most of these rules will impact many of our clients. Funds have run out, and the 8 week period rules were met. This does not change your forgiveness application. We will continue to track and manage your expenses using these new tools to ensure that forgiveness is favorable to you.

Given these changes, we expect that the SBA will release a NEW forgiveness application in the coming weeks. Therefore, we will NOT be preparing any final forgiveness applications until this is released. We also expect that banks will not be ready to accept forgiveness applications until AT LEAST July 1.

Under this new law, borrowers have 10 months from the end of their period to file for forgiveness. Once the application has been submitted, the banks have 60 days to review and approve your request for forgiveness.

This is going to be a slow process, and we will continue to adapt to the new rules to make sure that your forgiveness application is accurate and in your best interest. We will not drag our feet in the preparation of these documents for you, but this will not be a quick turn around for many reasons.

We will continue to communicate with you about the status of our tracking and application process in the coming weeks. We hope to have the majority of the “heavy lifting” complete by the end of this month. Once the final application is complete, we’ll prepare and ready it for submission.

Please let us know if you have any questions!

The Team @ Paper Trails