On Wednesday evening, the U.S. Senate approved H.R. 7010, a bill that will dramatically change critical terms to the Small Business Administration's Paycheck Protection Program, providing much needed relief for borrowers.
The bill is now awaiting signature by President Trump.
If signed into law, the bipartisan bill, titled the Paycheck Protection Program Flexibility Act of 2020, will extend the eight-week covered period under which loan recipients can spend the PPP money to 24 weeks from the date of the loan’s origination, or December 31, 2020, whichever comes earlier.
Limitations still remain, such as the maximum amount paid to any one employee that will be forgiven is still capped at an annualized salary of $100,000.
Other features of the new bill include:
- Removing limitations on loan forgiveness for small businesses that were unable to rehire employees, hire new employees or return to the same level of business activity as before COVID-19.
- Expanding the 25% cap to use PPP funds on nonpayroll costs (rent, mortgage interest and utilities) to 40% of the total loan, lowering the 75% requirement for payroll expenses to 60% to get maximum forgiveness.
- Allowing small businesses to take a PPP loan and also qualify for a separate, recently enacted tax credit to defer payroll taxes.
- Extending the loan terms for any unforgiven portions that need to be repaid from two years to five years, at 1% interest.
- Extending the period for when a business can apply for loan forgiveness, from within six months to within 10 months of the last day of the covered period. PPP loan interest and payment of principal and fees will be deferred until the loan is forgiven by the lender.
Please feel free to reach out to Brixey & Meyer to help navigate the loan forgiveness process. We are committed to keeping our clients, friends and families posted on the latest developments in these unprecedented times. You can simply comment below, visit our website or call us at 866.760.0940.