The United States Senate just approved the House version of the Paycheck Protection Program (PPP) legislation this Wednesday, augmenting the time given for small businesses and other PPP loan recipients to utilize funds and still be eligible for forgiveness of the loans.
Passed in a unanimous voice vote, the bill is a fluctuation in the threshold for the quantity of PPP funds needed to be spent on payroll costs to meet the requirements for forgiveness to 60% of the loan amount. The bill ultimately be sent to President Trump’s for signature.
Below is a summary of the novel legislation:
- The payroll expenditure condition plummets from 75% to 60%, but is now a cliff, which means borrowers are required to spend a minimum of 60% on payroll, otherwise the loan will not be forgiven.
- PPP borrowers can opt to prolong the eight-week period to 24 weeks or can maintain the original eight-week period. This flexibility was created to help borrowers reach full or nearly full forgiveness.
- Borrowers are allowed to utilize the 24-week period to restore their workforce wages and levels to pre-pandemic heights demanded for full forgiveness. This must be completed by December 31 instead of the original deadline of June 30.
- Borrowers now have five years to pay the loan instead of two years, but the interest rate stays at 1%.
- The legislation has two novel exceptions that allow borrows to obtain full PPP loan forgiveness, even if the individual does not entirely restore their workforce. Prior guidance permitted borrowers to exclude from those calculations workers who declined good faith to be rehired at equivalent hours prior to the pandemic. Consequently, the novel bill lets borrowers adjust if they could not find eligible workers or were unable to restore establishment operations to February 15, 2020.
Read more of the legislation here.
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