On Friday, June 5, the President signed legislation that significantly changes the PPP (Paycheck Protection Program), making it easier for borrowers to qualify for full, or almost full, forgiveness. The key changes are:
- Borrowers now have 24 weeks to exhaust their loan funds instead of just eight weeks. Borrowers who received their funds prior to June 5 now have the flexibility to extend the covered period to 24 weeks, but the covered period for new and existing borrowers must end by December 31, 2020.
- Borrowers now have until December 31, 2020 to restore their workforces to the pre-pandemic level required for full forgiveness. Borrowers unable to return to the number of full-time employees they had on February 15, 2020 will still qualify for forgiveness if they can demonstrate the inability to rehire or hire workers is due to reduced business activity.
- Borrowers are no longer required to put 75% of loan funds toward payroll costs to qualify for full forgiveness. The revised law lowers the threshold to 60%, and guidance from the SBA indicates that borrowers who use less than 60% of their disbursement to cover payroll are still eligible for partial forgiveness.
- New borrowers now have five years to repay the loan instead of two. Existing PPP loans can be extended up to 5 years if the lender and borrower agree.
We expect the SBA, IRS, and Treasury to issue guidance on these changes shortly, as well as guidance on the forgiveness application process. We strive to keep you abreast of new developments and are happy discuss how to make these changes work for you and your business. As always, please contact us if you have questions or concerns.
Ann K. Sullivan, Esq. (firstname.lastname@example.org)
Deborah Y. Collins, Esq. (email@example.com)
Sybil L. Spurgeon, Esq. (firstname.lastname@example.org)
Melissa Morris Picco, Esq. (email@example.com)