Houses Passes PPP Loan Forgiveness Bill

This past weekend on May 27 the house passed the Paycheck Protection Program Flexibility Act to help ease restrictions on the Small Businesses who are looking for loan forgiveness. The House bill follows close behind the new Treasury Department “Interim Final Rules late on May 22. ” The bill reduces the amount of the loan needed to be spent on payroll cost. It decreases from 75% to 60%. This allows businesses to increases how they allocate funds for rent, mortgage payments, utilities, etc. from 25% to 40%.

The new bill includes:

• Increase the time period businesses have to use the funds from 8 weeks to 24 weeks

• Change the deadline to rehire workers from June 30 to December 31, 2020

• Provide more latitude on loan forgiveness for business owners who display they could not rehire workers or reopen due to safety standards

• Increase the time period recipients have to repay the loan

• Let companies that receive loan forgiveness defer payroll taxes

The Senate is in favor of a different bill, but has many similarities to give hope to small business. Until the bill goes through the necessary processes to place into effect. There were new and harsher Treasury Regulations issued on May 22 dictating how the PPP Loan forgiveness works. The concern many business have with the new regulations are how to calculate the forgivable portion of the loan.

New Rule Information:

• SBA can review the loan at anytime

• Loan forgiveness process can take up to 5 months

• Borrower is required to calculate the loan forgiveness

• Employees need to be rehired by June 30, 2020

• Loan forgiveness relating to retaining the same number of full-time employees

• Loan forgiveness relating to keeping the same wages per employees

• Owner employees and the self-employed payroll capped at $15,385

For more information, please visit https://www.forbes.com/sites/allbusiness/2020/05/31/house-passes-ppp-loan-forgiveness-bill-treasury-issues-harsh-forgiveness-regulations/#7690a98648cb. If you have any additional questions contact us. We are here for you