6-4-20 Client Alert - PPP Loan Forgiveness - Important Update

On Wednesday, June 3, 2020, the U.S. Senate passed changes to the Paycheck Protection Program (PPP) that will allow small businesses more flexibility in using the loan funds. The U.S. House of Representatives previously passed the measure and the President is expected to sign the act. The act would make several significant changes to the PPP loan program. A summary of the changes is below:

Paycheck Protection Flexibility Act

The threshold requiring that 75% of any funds eligible for forgiveness be spent on payroll costs would be reduced to 60%. However, the 60% threshold would be a cliff, so that if a participant does not spend at least 60% of the total PPP funds on payroll, they will be eligible for NO forgiveness.
The deadline for spending funds to be eligible for forgiveness would be extended to December 31, 2020; however, the deadline for applications remains June 30, 2020.
Borrowers would be able to choose to keep the 8 week window for spending funds to be eligible for forgiveness or they could elect to extend it to 24 weeks.
The June 30 deadline to restore FTE count would be extended to December 31.
Additional exceptions to reduction of the forgiveness amount would be added, including that forgiveness will not be impacted if the business could not find qualified employees or if they are unable to restore business operations to 2/15/20 levels due to COVID operating restrictions.
The repayment term for PPP loans that are not forgiven would be extended from 2 years to 5 years.
Borrowers would be able to delay payment of payroll taxes under the CARES Act, which was originally prohibited for PPP borrowers.

We will provide further updates on this act, and include a more detailed summary if and when it is signed into law.

Please contact your Woods Oviatt attorney or the attorneys listed below regarding this or any COVID-19 related issues.

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