*Updated June 5, 2020
For many companies who received a Paycheck Protection Program (PPP) loan, unexpected problems arose alongside the payroll issues the PPP was designed to help solve. PPP provides forgivable loans to small businesses impacted by the COVID-19 pandemic (for background information, see our blogs about PPP here, here, here, and here). As the program nears the end of the covered period on June 30, however, it has become clear that borrowers are facing unintended complications.
The Paycheck Protection Program Flexibility Act of 2020 was introduced to address some of these problems. The bill (text of which you can read here):
· Extends the forgiveness period to 24 weeks
· Replaces the 75/25 rule with a 60/40 rule
· Increases maturity from 2 years to 5 years for all new PPP loans (existing loans remain at a 2-year maturity)
· Allows businesses that receive loan forgiveness to also receive payroll tax deferment
· Ensures small businesses won’t be penalized by high unemployment benefits
· Creates a safe harbor for businesses that are required to open at only 50 percent capacity
This new legislation passed the House last week and the Senate yesterday. It is now on its way to the president’s desk for review. On Friday June 5, President Trump has signed this bill into law.
Borrowers may wish to seek the advice of counsel to determine how these changes will impact their loans and forgiveness potential.
Please note this current global emergency and applicable laws, regulations, proposals, guidance, advice, and responses change rapidly. We strive to keep you up to date as much as possible, but this blog article is intended for general informational purposes only and should not be construed as legal advice or opinion. Contact myHRcounsel with questions concerning specific facts and circumstances. Our ASK Pro service includes legal advice on PPP loans. To learn more, click here…
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Written by Brittany Nicholls