Timeline Extended for PPP Loan Forgiveness
On Thursday, the U.S. Senate passed the House version of the Paycheck Protection Program (PPP) Flexibility Act of 2020 ( H.R. 7010) and it is expected to be signed into law by President Trump. This new bill provides additional time for small businesses and others who received PPP loans to spend those funds and still meet the qualifications to have the loans forgiven.

The bill was passed unanimously by the Senate in a voice vote, supported by leaders from both parties. Originally the first recipients of PPP loans were given an eight-week window, which was expiring. This new law allows for an extension of that deadline.
Here are some highlights from the legislation:

  • Those who are current PPP borrowers are now able to extend the eight-week period to 24 weeks. They can also keep the original eight-week period.
  • New PPP borrowers will have a 24-week covered period.
  • The covered period for new borrowers cannot extend beyond Dec. 31, 2020.
  • The payroll expenditure requirement has been dropped from 75% to 60%; however, borrowers must spend at least 60% on payroll or none of the loan will be forgiven.
  • Those who took advantage of the PPP loans can use the 24-week period to restore their workforce and wages to pre-pandemic levels required for full forgiveness. The deadline changed from June 30 to Dec. 31.
Exceptions

Originally the legislation included an exception for borrowers to exclude from their calculations employees who turned down "good faith offers" to be rehired at the same hours and wages as before the pandemic. This new bill allows borrowers to adjust if they could not find qualified employees or if they were not able to restore operations to Feb. 15, 2020, levels due to COVID-19 related restrictions.
Additionally, new borrowers will have five years to repay the loan instead of two. If both lender and borrower agree, existing PPP loans can be extended up to five years at a 1% interest rate. Also, businesses that received PPP loans may delay payment of payroll taxes, something that was originally prohibited under the CARES Act.
The speed of change has never been more challenging, especially for those who are responding to legislation that affects their businesses and livelihoods. We are here to be of service to you. If you have questions, please call us at 630-653-1616 or send us an email. We're eager to help.
The Partners and Staff at Mathieson, Moyski, Austin & Co., LLP
Ron Austin, CPA
Brian Eisenmenger, CPA
Brian Hagene, CPA
Brett Mathieson, CPA
John Straus, CPA
Connect With Us