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PPP Reform Bill Details

June 5, 2020

As you may have heard by now, the Senate passed the House bill offering much needed changes to the PPP program. This is what we know:

  1. The 8-week period for the PPP loans has been extended to 24 weeks. However, if you have already received your loan before this bill is signed into law, you may choose to keep the 8-week period. If you’re already on track to meet the 60% you can file for forgiveness after your 8-week period is over. This will get the debt off your books and help if you need additional financing for whatever reason down the road.
  2. The 75% minimum required to be spent on payroll has been reduced to 60%. However, previously it was stated that if you did not reach the 75% minimum, your forgivable loan amount would be reduced do that 75% of your expenses was spent on payroll. Now, you must spend at least 60% on payroll in order to qualify for any forgiveness. We are hoping to see this changed at some point.
  3. The amnesty re-hire date has been extended to December 31st So, as long as you have the same amount of employees on December 31, 2020 that you did pre-Covid, on February 15, 2020, you are good to go. They don’t have to be the same employees, or even in the same positions, so long as they are employed by you.
  4. If you could not find qualified replacements to hire, or could not restore business to previous levels of activity due to federal health guidance issued regarding social distancing and/or maintaining standards of proper sanitization, then you will still be able to qualify for full forgiveness. This still seems to be a gray area and we are hoping to receive more guidance on this.
  5. For any amount that is not forgiven, the repayment period was extended to 5 years with the first payment being deferred for up to 150 days after submitting your loan forgiveness application. The 1 % interest remains the same, so still pretty cheap money if you need to hold on to it to make sure you have some cash in the bank.
  6. Payroll taxes can now be deferred for up to 2 years whether or not you’ve received the PPP loan. PAAR MELIS DOES NOT RECOMMEND THIS! This is only a deferral – you will STILL have to pay these taxes (50% in 2021 and 50% in 2022, on top of the current payroll taxes at that time). That can add up to a pretty big chunk at one time.

There are still a lot of questions to be answered. Will the $15,385 cap be proportionately raised to $46,153? Will owners’ compensation cap be raised from 8 weeks of 2019 pay to 24 weeks of 2019 pay? Can you apply for forgiveness before the 24-week period is up if you have used all your funds?

We will keep you as up-to-date as possible with emails and through our Facebook and here on our website.

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