You are here

Congress Loosens PPP Loan Restrictions

Congress Loosens PPP Loan Restrictions

Congress recently passed legislation to loosen some of the restrictions that came with the popular Payroll Protection Program; the president signed it into law on June 5.

The new law runs only about 1,000 words, but contains several major changes that vastly extend the terms of the program:

•             The new law lets PPP loans run for 24 weeks — previously the term had been 8 weeks. Notes The Wall Street Journal, this gives "small businesses more time to use the money and still have the loans forgiven while helping them better navigate the uncertainties around reopening."

•             The law extends the deadline to rehire workers to Dec. 31 for those companies that want to qualify for loan forgiveness. Previously, this deadline was June 30.

•             The law lowers the bar for PPP funds that must be used for payroll to 60% for those businesses that want forgiveness. Previously, it was 75%. But this is a "cliff," according to guidance from the American Institute of CPAs: "Borrowers must spend at least 60% on payroll or none of the loan will be forgiven." The previous "sliding scale" calculation method may return in future legislative tweaks, however.

•             Previously, in order to be eligible for forgiveness, borrowers had to show they kept employees or rehired them within a set period of time. While this is still true, there's some leeway in the new law: "The new bill allows borrowers to adjust because they could not find qualified employees or were unable to restore business operations to Feb. 15, 2020, levels due to COVID-19 related operating restrictions," according to the AICPA.

•             Borrowers can now take up to five years to repay the loan, instead of the previously established two years. The interest rate remains 1%.

•             The new law permits PPP loan recipients to also delay payment of their payroll taxes. This was previously prohibited.

More guidance and clarifications are likely to come. Until then, loan recipients may want to check AICPA guidance or the bill itself.

Meanwhile, loan recipients planning to submit forms for loan forgiveness should tread carefully: It may take some time for the Small Business Administration to update its form to align with the new, more flexible terms.

Content Created by IndustryNewsletters 2020

Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.

Copyright © 2018 IndustryNewsletters. All rights reserved.

Other Blog Articles

Cybersecurity and the Importance of Data Privacy

Cybersecurity — especially data privacy — is one of the biggest problems facing businesses today. These security problems are compounded because every segment of every industry is affected differently, and each is subject to the risk factors peculiar to that segment.

What Is I-9 Employment Eligibility Verification?

It's a typical scenario at businesses around the country: You need to hire staff quickly, and potential employees arrive with great recommendations. They have all the skills and qualifications for their positions.

Special Report: A Quick Introduction to the World of OSHA

Even if employers aren't fully aware of it, the Occupational Safety and Health Administration (OSHA) is something they should learn about – because its rules almost certainly apply to them. The Occupational Safety and Health Act covers many private sector employers as well as their workers.

Know the EEOC: Employment Opportunity for All

Discrimination in the workplace can be a very sensitive topic to bring up. We've all heard of various laws the government creates to keep places of business fair, and most of our jobs tell us about or make us watch videos about workplace equality when we first start.

DOL Rule Called 'End-Run' Around Affordable Care Act

A federal judge has ruled that two parts of the Department of Labor (DOL) rule expanding employers' ability to join in association health plans (AHPs) violate ERISA. AHPs are group health plans sponsored by a group of employers.

Pages

How can we help?

Let Autopaychecks provide you with a single solution to managing payroll, human resources, time tracking and employee benefits.

Phone: 970-245-4244
Email: info@autopaychecks.com

Autopaychecks, Inc.

Providing payroll, human resources, time tracking and benefits solutions for small-to-mid-sized companies.

iSolved Solutions from Autopaychecks
iSolved Network Certified Partner