PPP Loan Forgiveness Updates
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Legislation signed June 5 lowered to 60% from 75% the minimum percentage of Paycheck Protection Program (PPP) funds borrowers have to spend on payroll costs to have the loans forgiven. Also, the SBA clarified that Borrowers will still be eligible for partial loan forgiveness if the borrower did not spend at least 60% of the PPP funds on payroll costs.
New rules, guidance, applications coming
The SBA, in consultation with Treasury, will “promptly” issue rules and guidance, a modified borrower application form, and a modified loan forgiveness application implementing the amendments to the PPP made in the new law. Here’s a summary of the changes with the new legislation:
- The covered period for loan forgiveness was extended from eight weeks to 24 weeks after the date of loan disbursement. Borrowers that have already received PPP loans retain the option to use an eight-week covered period.
- Provides a safe harbor from reductions in loan forgiveness based on reductions in full-time-equivalent (FTE) employees for borrowers that are unable to return to the same level of business activity the business was operating at before Feb. 15, 2020, due to compliance with requirements or guidance issued between March 1, 2020, and Dec. 31, 2020, by the secretary of Health and Human Services, the director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration related to worker or customer safety requirements related to COVID-19.
- Provides a safe harbor from reductions in loan forgiveness based on reductions in FTE employees, to provide protections for borrowers that are both unable to rehire individuals who were employees of the borrower on Feb. 15, 2020, and unable to hire similarly qualified employees for unfilled positions by Dec. 31, 2020.
- Increases to five years the maturity of PPP loans that are approved by the SBA (based on the date the SBA assigns a loan number) on or after June 5, 2020.
- Extends the deferral period for borrower payments of principal, interest, and fees on PPP loans to the date that the SBA remits the borrower’s loan forgiveness amount to the lender (or, if the borrower does not apply for loan forgiveness, 10 months after the end of the borrower’s loan forgiveness covered period).
If you or your business need help and guidance working through PPP applications or loan forgiveness, Ximplifi is here to help. Contact us today to learn how we can help.
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