New Changes to the Paycheck Protection Program
JUNE 4th, 2020
HR 7010 passed by the Senate yesterday and headed to the President for signature. It accomplishes a few things including:
- Borrowers can choose an 8 week or 24 week covered period to spend PPP fund and maintain FTEs to qualify for full forgiveness.
- Borrowers will have 5 years to repay any loaned funds, up from the original 2 years.
- Originally 75% had to be used on payroll and 25% on the nonpayroll, but approved expenses. These nonpayroll, but approved expenses can now be covered up to 40% with PPP funds. Payroll must be 60% of the PPP funds usage now. If 60% isn’t used on payroll, then there is no loan forgiveness.
- Companies will have until 12/31 to rehire FTEs who were previously laid off due to COVID to achieve full loan forgiveness.
- Employers who receive PPP loan forgiveness can also defer employer share of Social Security tax due from 3/27-12/31 with a 50% payment due on 12/31/2021 and the other 50% due on 12/31/2022. We previously held the position this isn’t worth the trouble though of playing with payroll taxes and this is still our recommended course of action.
- Companies that try to rehire, but fail to do so will receive exceptions if: they cannot find qualified employees, cannot restore the business to a comparable level due to social distancing or other Federal rules and regulations.
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