Oops, They Did It Again! Another Big Change to the Paycheck Protection Program Loan Forgiveness
Oops, They Did It Again!  Another Big Change to the Paycheck Protection Program Loan Forgiveness
June 01, 2020

On May 15, 2020, the Treasury Department and Small Business Administration (“SBA”) released the Paycheck Protection Program (“PPP”) Loan Forgiveness Application (“Application”), which included long-awaited instructions for borrowers of PPP loans who intend to seek forgiveness. The application and directions can be found HERE. A week later on May 22, the SBA issued additional comments on the loan forgiveness process for both entrepreneurs and banks, which gave more clarity but left a number of questions still unanswered. Now Congress is weighing in with potentially sweeping changes.

On Thursday, May 29, the House of Representatives passed HR 7010, the Paycheck Protection Program Flexibility Act of 2020. It passed by a noteworthy 417 to 1, which is a positive indicator of bi-partisan support that we expect will carry over to the Senate, although there are at least two competing bills in the Senate and it is anyone’s guess what the final terms will be once the law passes.

New Legislation Highlights (NOT YET PASSED INTO LAW)

HR 7010 (HERE), if passed as is, would make multiple changes to the PPP Loan program.  The changes include a big one: extending the 8-week Covered Period to 24 weeks (or December 31, 2020, if earlier). Additional highlights include:

  • Up to 40% of loan forgiveness can apply to non-payroll costs (currently only 25%)
  • Extend the deadline to rehire workers past June 30
  • Extend the time-period for repayment for amounts not subject to forgiveness (2 to 5 years)
  • Companies that receive loan forgiveness can defer payroll taxes

Once we know the final legislation, we expect there will be follow on regulations and interpretations which will likely also be updated thereafter.  Meanwhile, many of you are well into your 8 weeks and are inevitably left wondering how to proceed.

How do you proceed to use your PPP funds during this cloud of uncertainty?

  • If you have not had to pull back on your business and therefore did not need to reduce payroll, then you are blessed and can spend those dollars in the normal course of business in the existing 8 weeks and achieve full forgiveness.  Just remember to use at least 75% on payroll until we learn that the legislation has passed, which would reduce that percentage to 60% if unchanged.
  • Document and track all qualifying expenditures in detail.
  • If you have offered to rehire employees and they ignore the offer, or refuse to return to work, keep excellent records as the loss of those employees should not count against your FTE calculations.
  • Consult with legal and accounting advisors, along with your banker who will be administering your application for loan forgiveness.

Hunter Business Law is continuing to review and monitor additional updates and/or guidance provided by Congress, the Treasury Department, and the SBA. For our Coronavirus alerts click HERE.


This Bog was written by Hunter Business Law Attorneys Stephanie Boussias, Esq., and Sheryl Hunter, Esq. 

DISCLAIMER: This blog is for educational purposes only and does not offer nor substitute legal advice. Additionally, this blog does not establish an attorney-client relationship and is not for advertising or solicitation purposes. Any of the content contained herein shall not be used to make any decision without first consulting an attorney. The hiring of an attorney is an important decision not to be based on advertisements or blogs. Hunter Business Law expressly disclaims any and all liability in regard to any actions, or lack thereof, based on any contents of this blog.

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