On June 5, 2020, the President signed into law important revisions to the Payroll Protection Program, including significant changes to the requirements for PPP Loan forgiveness.
The changes are consistent with the bill passed by the House on May 28th which are outlined in the Southern Chester County Chamber of Commerce Webinar. The webinar also includes an overview of the PPP loan forgiveness application process.
The highlights of the recently enacted changes to the PPP program include:
- Small Businesses now have 24 weeks (instead of 8) to spend their PPP funds;
- Borrowers have to spend at least 60% of the PPP Funds on payroll costs and can spend up to 40% on other approved expenses. The prior ratio was 75/25. It is important to note that if a business does not spend at least 60% of their PPP funds on payroll expenses, ALL of the PPP funds become a loan;
- Employers have until 12/31 (instead of 6/30) to bring employees back to full time status;
- PPP recipients will also be able to take advantage of payroll tax deferrals; and
- Any PPP funds that are not eligible for forgiveness will become a loan that can be repaid over 5 years (instead of 2).
How the PPP program’s requirements apply to your business and its forgiveness application requires a very fact specific analysis. If you have questions about how to best your PPP funds or apply for loan forgiveness, please contact Mary Kay Gaver at [email protected].
