The Latest Changes to PPP Guidelines
If you have been keeping up with the rapidly changing information on the PPP (Paycheck Protection Program loans) you have been watching the status of the latest bill that outlines changes in the guidelines. Bill H.R. 7010, which passed the senate last week and was signed by the President last Friday, holds some good news for PPP loan recipients. We found several articles that break down the changes. Here are the main points:
Time to Use Funds Has Been Extended. Borrowers now have 24 weeks or by December 31, 2020 to use the funds. Previously the loan funds were to be used within eight weeks from the loan origination date in order to be forgiven.
Required Payroll Percentage is Lower - There is also a new catch. The amount that must be used for payroll has changed from 75% to 60%. This is great, but please note, borrowers will now be required to spend a minimum of 60% of the funds on payroll expenses or none of the loan will be forgiven.
December 31 Rehire Deadline. The bill extends the period in which you must rehire from a deadline of June 30 to by December 31, 2020.
Repayment Term Extended. The loan repayment term, for any amount not forgiven, has been extended to five years with a 1% interest rate. Previously this was two years.
Deferral of Payment. The payments and interest can be deferred until the final amount that will be forgiven has been determined, up to 10 months from the program’s expiration date. After 10 months, payments must begin.
You may go ahead and apply for forgiveness if you are ready; however, it is imperative to understand that if 60% of your loan is not spent on payroll expenses, it could jeopardize any forgiveness of the loan. We hope this information proves helpful and that you are getting back on your feet.
This post is meant for informational and educational purposes. It is not tax, legal, or financial advice. As always, Business by the Book recommends that you consult with your CPA regarding any tax or legal questions.
