Forgiveness: The Nitty Gritty

Breaking News – The Senate unanimously passed a bill yesterday evening that proposes to modify key aspects of the Paycheck Protection Program (PPP or the Program) and ultimately aims to provide greater flexibility for borrowers to spend their loan proceeds and subsequently seek forgiveness.  The bill has now been sent to President Trump for signature and, while technical corrections are anticipated to be made, the current version of the bill would amend the following features of the Program:

  • Increases the current two year loan to a minimum of five years for loans made on or after the amendment date becomes effective
  • Extends the end date for use of funds under the Program to December 31, 2020
  • Expands the 8 week covered period to the earlier of December 31, 2020 or 24 weeks after loan origination.  Borrowers may still elect to utilize the current 8 week period, if preferred.
  • Revises the previous 75/25% rule to now be 60/40% related to the use of the loan proceeds between payroll and nonpayroll costs
  • Provides borrowers with an additional exemption to a reduction in full-time equivalent (FTE) employees if they are able to document their inability to hire or re-hire employees or that they were unable to return to the same level of business operations due to compliance requirements established by regulatory agencies
  • Modifies the current six-month deferral period for loan principal and interest payments to now begin on the date that forgiveness of the loan is remitted to the lender (up to a maximum deferral of ten months from the end date of a borrower’s covered period)
  • Allows borrowers who received forgiveness of a PPP loan to now defer the deposit of certain employment taxes under Section 2302 of the CARES Act (previously borrowers who received forgiveness were ineligible)

If the bill is ultimately signed by President Trump, we will provide an overview of the final version of the bill, once available.

This information was last updated on Thursday June 4, 2020 at 11:00 a.m. We will update this page with changes and update the timestamp accordingly.

Before we begin, two quick reminders: (1) this Program remains a work-in-process and information provided is subject to change! (2) for all costs about which the CARES Act and the SBA are silent, there is the possibility that payment of those costs will not be forgiven and will have to be repaid.

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