PPP Loan Forgiveness Update – H.R. 7010

As important and beneficial changes have been made pertaining to the rules of the Paycheck Protection Program (PPP) loan forgiveness, we created a video to inform you of the latest updates. In our video, our founding partner and practice management expert, Jay Shorr, walks you through the H.R. 7010 Bill the senate passed on May 28, 2020, amending the CARES Act. There are several key aspects of the loan forgiveness provisions of the PPP. Here are the key provisions of the amendment:

• The maturity date of the loans will now be a minimum of 5 years (vs. 2 years). The actual term will be as mutually agreed upon between the lender and borrower.
• The covered period as defined in the law has now been amended to December 31, 2020 from June 30, 2020.
• The covered period still begins on the date of loan origination however it is extended to the earlier of:
  • The date that is 24 weeks after the date of loan origination or
  • December 31, 2020.
• A borrower may elect for the covered period to be 8 weeks (vs. the 24 weeks noted above).
• In addition, the exemption based on employee availability will be the period beginning February 15, 2020 and ending on December 31, 2020. The amount of loan forgiveness will now be determined without regard to a proportional reduction in the number of full-time equivalent employees if the borrower, in good faith, is able to document the following:
  • An inability to rehire individuals that were employees on February 15, 2020; and
  • An inability to hire similarly qualified employees for unfilled positions on or before December 31, 2020; or
  • Is able to document an inability to return to the same level of business activity as compared with February 15, 2020 due to compliance with requirements established by HHS, CDC, or OSHA during the period March 1, 2020 and ending December 31, 2020 related to standards for sanitation, social distancing, and any other safety requirements related to COVID-19.
• To receive loan forgiveness a borrower is required to use at least 60% of the covered loan amount for payroll costs and may use up to 40% for payment of interest on covered loans, payment of rent, and covered utilities.
• The payment deferral period has also been amended to extend to not less than 6 months and not more than 1 year from the date on which the amount of loan forgiveness is remitted to the lender.

We are very pleased to see the House and Senate act swiftly on these important issues. We are still awaiting final guidelines concerning adjudication of the loan forgiveness aspects of the PPP from the SBA and Department of Treasury, however, this amendment to the law will provide much needed additional relief to small businesses.