House Passes Bill to Provide PPP Forgiveness Flexibility
May 29, 2020
HBE has been closely monitoring the developments regarding the Paycheck Protection Program (PPP) loans. We know that some of our clients are coming up on the end of their eight week forgiveness period. Yesterday, the House passed legislation that we hope will pass in the Senate next week allowing for a longer period of time to spend PPP funds and qualify for forgiveness.
The House bill, known as the Paycheck Protection Program Flexibility Act of 2020, provides the following key provisions:
- Extends the original eight-week forgiveness period to 24 weeks.
- Amends the percentage of funds that borrowers must spend on payroll costs versus non-payroll costs, such as rent and utilities, in order to qualify for full loan forgiveness. (Currently known as the 75/25 rule.)
- Extends the two-year term for the loans to five years.
- Extends the deadline to rehire workers to align with the expiration of enhanced Unemployment Insurance benefits.
It is important to note that this legislation is not final. A similar bill close to a vote in the Senate would also extend the eight-week forgiveness period to 16 weeks, but would not change the 75/25 rule. Senators are expected to return to the issue when the chamber is in session next week.
As of May 27, 2020 the SBA had approved nearly 4.5 million PPP loans totaling more than $510.5 billion. More than $135 billion in PPP funds are still remaining for funding. If your business has been negatively impacted by the coronavirus pandemic and you did not previously apply for a PPP loan but would like to do so now, please contact our office. Our team is available to help you with gathering information for your loan application, as well as provide support and assistance through the forgiveness phase.
This communication and any applicable contents pertaining to COVID-19 employer relief provisions is based on our professional judgment given the facts provided to us and the COVID-19 employer relief provisions guidance as of the date of the communication. Subsequent developments changing the facts provided to us, or differences in the final guidance and regulations once they are issued, may affect the advice provided. These effects may be material.