Friday, June 5, 2020
PPP Revisions Now Approved; Updated PPP Report
To our clients and friends of MM,
A month has passed since our previous PPP update, and we have another noteworthy day today. Earlier this week Congress approved changes to the PPP and this morning, the President signed the Paycheck Protection Program Flexibility Act (PPPFA) into law. We’re pushing these revisions through our forgiveness model, which will allow a greater portion of PPP loans to qualify for forgiveness in most cases. Among the changes are some key benefits:
- Portion required for payroll to meet forgiveness changes from 75% to 60% allowing 40% for other qualified expenses.
- The 8-week period to use the funds has been extended to 24 weeks (up to 12/31/2020). Applications for forgiveness can be submitted after 8 weeks.
- Rehiring workers has been extended from June 30 to December 31, 2020 in order to have compensation count towards forgiveness. No changes to the $100k annual max compensation in the forgiveness calculation.
- Timeline to return to the same headcount for maximum loan forgiveness is extended from June 30 to December 31, 2020, plus additional exceptions are provided including demonstration of inability to rehire former employees or qualified employees of the same caliber, or inability to return to same business levels as February 15, 2020. We’re hoping for more guidance on this particular item.
- For portions of the loan that are not forgiven, the repayment term has been extended from 2 year to 5 years. Interest at 1% and 6 month deferral until first payment remains.
A detailed tracking of how the loan funds are used and contemporaneous records of financial aspects of the business should be developed during these weeks (now 24 weeks) and retained for future reference should questions arise related to eligibility for the loans and loan forgiveness.
Like me, you may be interested in the data. Info such as loans issued by industry, by state, average size of loan, etc. is included in the updated PPP Report from the SBA, also published this week. An easy overview, I promise.
Stay well, stay safe.
Claire