Changes were just signed into law for the Paycheck Protection Program (PPP) that will be of great benefit to small businesses.

 

Key program changes include:

• Reducing the minimum percentage of funds required to be spent on payroll costs from 75% to 60%.

• Extending the loan forgiveness covered period from eight to 24 weeks after the date of loan disbursement or through Dec. 31, whichever comes first. Borrowers who have already received PPP loans retain the option to use an eight-week covered period.

• Increasing the loan term for five years (for loans approved by the SBA on or after 6/5/20). Borrowers and lenders could agree to extend current loans.

• Providing a “safe harbor” from reductions in loan forgiveness based on reductions in full-time employees if unable to 1) resume level of pre COVID-19 business activity due to worker or customer safety compliance issues; or 2) rehire individuals/hire similarly qualified employees for unfilled positions by December 31, 2020.

• Extending the deferral period for borrower payments of principal, interest, and fees to the date that SBA remits the borrower’s loan forgiveness amount to the lender. Borrowers that don’t apply for forgiveness would be given at least 10 months after the program expires to start making payments (six months previously). 

 

Check out the PPP program press release and Treasury’s updated Interim Final Rule for more info.