June 5, 2020
On Wednesday, June 3rd, the Senate passed H.R. 7010, the “Paycheck Protection Program Flexibility Act of 2020”. The bill is now headed to the President’s desk for his signature.
H.R. 7010 makes important changes that should help all Paycheck Protection Program (PPP) borrowers:
- Extends the “covered period” for borrowers to spend PPP loan funds to December 31, 2020 from the previous June 30th date.
- Extends to December 31, 2020 (instead of June 30, 2020) the opportunity for PPP loan forgiveness for payroll and payroll-related expenses, utilities, rent, interest payments on mortgages obligated before February 15, 2020.
- Increases to 40% (from the previous 25% requirement) of PPP loans eligible for forgiveness for non-payroll and payroll-related expenses.
- Grants an option to PPP borrowers who obtained loans before the effective date of H.R. 7010 to elect the period that qualifies as the “covered period” to eight (8) weeks after the date of loan origination even if that period extends beyond June 30, 2020.
- Exempts from proportional reduction of loan forgiveness for PPP borrowers’ employees that the borrower in good faith can document:– An inability to rehire individuals who were employees on February 15, 2020, and
– An inability to hire similarly qualified employees for unfilled positions on or before December 31, 2020; OR
– An inability to return to the same level of business activity the borrower had before February 15, 2020 because of the borrower’s compliance with requirements or guidance issued by federal agencies beginning on March 1, 2020 and ending on December 31, 2020 that relate to sanitation, social distancing, or other worker-safety requirements related to COVID-19.
- Extends the original “deferral period” for repayment of PPP loan principal, interest and fees from the original period of six months to one year to the date on which the SBA remits to the PPP lender the amount of loan forgiveness.
- Extends the PPP borrower’s time to decide whether to apply for loan forgiveness to ten (10) months after the last day of the “covered period” for the PPP loan.
H.R. 7010 also allows delay in payment of employer payroll taxes for recipients of any loan made pursuant to the Paycheck Protection Program and includes payroll taxes that would have been accrued from March 27, 2020.
This GRC Update is not intended and should not be construed as legal advice to NPA members.
Members should consult their own lawyers for legal advice.
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