Oops, They (OFFICIALLY) Did It Again! Another Big Change to the Paycheck Protection Program Loan Forgiveness – Updated 6/12/2020
Oops, They (OFFICIALLY) Did It Again! Another Big Change to the Paycheck Protection Program Loan Forgiveness – Updated 6/12/2020
June 12, 2020

Updated on June 12, 2020

Originally Posted on June 1, 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.

On Friday, June 5, the President signed HR 7010, the Paycheck Protection Program Flexibility Act of 2020, into law. A summary of which is below.

Highlights of New Legislation Passed into Law on June 5, 2020

HR 7010 (HERE), signed into law by the President on June 5, 2020, made multiple changes to the PPP Loan program.  The most significant change is the extension of the 8-week Covered Period to 24 weeks (or December 31, 2020, if earlier). Additional highlights include:

  • Only 60% of the PPP funds now need to be made up of payroll costs. This is down from the original 75% threshold required for forgiveness eligibility.
  • The deadline to rehire employees who were laid off has been changed from June 30, 2020, to December 31, 20202.
  • Full forgiveness can be achieved if a borrower is not able to restore their previous workforce because they couldn’t revive their business to the same degree as it was pre-COVID-19.
  • The amount of loan forgiveness a borrower receives can be determined without considering relational reductions in the number of full-time employees if:
    • an eligible recipient can demonstrate (1) an inability to rehire individuals who were employees on February 15, 2020; and (2) an inability to hire similarly qualified employees for unfilled positions on or before December 31, 2020.
    • the borrower cannot return to its February 15, 2020 level of business activity due to compliance with government (CDC, OSHA, etc.) guidelines related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID–19.
  • The term of the PPP loan has been extended from 2 years to 5 years.
  • The deferral period for the loan has been extended from 6 months to10 months after the last day of the covered period if you do not apply for forgiveness, or the date that the amount of forgiveness is determined.
  • PPP borrowers who applied for loan forgiveness may delay the payment of payroll taxes.

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 ordinary course of business in the existing 8 weeks and achieve full forgiveness.  Just remember to use at least 60% on your payroll.
  • 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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