Changes to PPP (Paycheck Protection Program) Loan Forgiveness
Posted by tim at June 5th, 2020
On June 5, 2020, President Trump signed H.R. 7010, which, among other things, changes the 8 week covered payroll period to 24 weeks, giving employers much more time to spend their PPP funds on payroll expenses and still have it forgiven.
If you are on track to use the PPP funds in 8 weeks and qualify to have the loan forgiven, you can use the 8 week covered period as originally planned. Otherwise, you will need to wait until the 24-week period is over to apply for loan forgiveness.
In general, employers still have to maintain an average FTE (Full Time Equivalent Employees) as prior to COVID-19, however, the rules about rehiring have been relaxed. Employers who make good faith effort to rehire, are at same staffing levels on Dec 31, 2020 (changed from June 30, 2020), or whose business slowed down due to certain safety compliance requirements will not be penalized for not having the same number of FTE’s.
Finally, this bill also changes the requirement of using 75% of the funds down to 60% of the funds for payroll. See link for actual text: https://www.congress.gov/bill/116th-congress/house-bill/7010/text
We are prepared to assist our clients in filling out their PPP Loan Forgiveness application for either the 8 week or 24 week covered period. Link to current forgiveness application: https://home.treasury.gov/system/files/136/3245-0407-SBA-Form-3508-PPP-Forgiveness-Application.pdf.
Employers electing to use the 24 week covered period should expect to receive a new PPP Loan Application from the SBA with the updated rules.
Yours for clean books,
Category: General News