Businesses all over the nation are feeling a bit of relief after the Senate passed, and President Trump signed, the H.R. 7010 bill on June 5th. The Paycheck Protection Program Flexibility Act (PPPFA) has been modified to loosen restrictions on how small businesses can spend their PPP loans if they want to qualify for any loan forgiveness.
The deferral period for loans has been revised to allow recipients to defer payments until after they receive a determination on the amount to be forgiven.
The most recent legislation eases conditions on use of the loan, now allowing businesses to spend their loan proceeds over a 24-week period after receipt of the loan (or by December 31, 2020), versus an 8-week period. The requirement that 75% of the loan proceeds must be spent on payroll to merit forgiveness has been reduced to 60%. Note, borrowers can still choose to use the eight-week plan if they so choose.
For amounts that will not be forgiven, businesses are now being given 5 years, instead of 2, to repay the loan.
The bill also extends the period in which an employer may rehire or eliminate a reduction in employment, salary, or wages that would otherwise reduce the forgivable amount of a paycheck protection loan. Keep in mind, the forgivable amount must be determined without regard to a reduction in the number of employees if the recipient is unable to rehire former employees and is unable to hire similarly qualified employees, or unable to return to the same level of business activity due to compliance with federal requirements or guidance related to COVID-19.
The deferral period for loans has been revised to allow recipients to defer payments until after they receive a determination on the amount to be forgiven. Recipients who do not apply for loan forgiveness have 10 months from the program’s expiration date to begin making payments.
For more information on the bill, go to: https://www.congress.gov/bill/116th-congress/house-bill/7010/text
Reach out to Blue Chip Benefits at (888) 225.8244 or Team@BlueChipBG.com with any questions.