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Trump expected to sign bill on PPP changes

In Business Madison
By In Business Madison
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The U.S. Senate passed the Paycheck Protection Flexibility Act, a house version of Paycheck Protection Program (PPP) revision legislation this week, tripling the time allotted for small businesses and other PPP loan recipients to spend the funds and still qualify for forgiveness of the loans. A key provision changing with the bill is the threshold for the amount of PPP funds required to be spent on payroll costs to qualify for forgiveness to 60% of the loan amount. The bill has been sent to President Donald Trump, who is expected to sign it.

Of note in the bill, June 30 remains the deadline for applying to receive a PPP loan, although the bill moves the June 30 deadline for spending the PPP funds to Dec. 31 to accommodate the new 24-week window.

Changes to the PPP include:

  • PPP borrowers can choose to extend the eight-week period to 24 weeks, or they can keep the original eight-week period.
  • Payroll expenditure requirement drops to 60% from 75% but is now a cliff, meaning that borrowers must spend at least 60% on payroll or none of the loan will be forgiven.
  • Borrowers can use the 24-week period to restore their workforce levels and wages to the pre-pandemic levels required for full forgiveness. This must be done by Dec. 31, a change from the previous deadline of June 30.
  • The legislation includes two new exceptions allowing borrowers to achieve full PPP loan forgiveness even if they don’t fully restore their workforce. First, as previously allowed, borrowers can exclude employees who turned down good faith offers to be rehired at the same hours and wages as before the pandemic in calculations. Second, the new bill allows borrowers to adjust because they could not find qualified employees or were unable to restore business operations to Feb. 15, 2020, levels due to COVID-19 related operating restrictions.
  • Borrowers now have five years to repay the loan instead of two. The interest rate remains at 1%.
  • The bill allows businesses that took a PPP loan to also delay payment of their payroll taxes, which was prohibited under the CARES Act.

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