On June 5, 2020 the President signed the Paycheck Protection Program Flexibility Act into law. The act modified the PPP forgiveness process and provided some much anticipated relief to business owners. On June 16, 2020 the Small Business Administration released amendments to the forgiveness application and instructions. At the same time, a new EZ forgiveness application and instructions were also released.
Highlights of the new legislation include:
- The covered period for loan forgiveness has been extended from 8 weeks to 24 weeks.
- Borrowers had been required to spend at least 75% of their loan amount on payroll related costs in order to obtain full forgiveness. This requirement has been reduced to 60%.
- Provides a safe harbor from forgiveness reduction resulting from the full time equivalent requirements if the business is unable return to the same level of business they were operating at on February 15, 2020 due to compliance requirements or guidance issued between March 1, 2020 and December 31, 2020. (see the EZ application for more information)
- Provides a safe harbor from forgiveness reduction resulting from the full time equivalent requirements if the borrower is unable to hire similarly qualified employees by December 31, 2020.
- Increases the loan maturity to five years for all loans approved by the SBA on or after June 5, 2020.
- Extends the deferral period for payments to the date the SBA remits the borrower's forgiveness amount to the lender or 10 months after the end of the borrower's loan forgiveness covered period.
- There was no change in the application deadline for new PPP loans. New loans must be approved by June 30, 2020.
Your bank still remains the best resource for guidance on the forgiveness process - including whether the EZ application will apply to your business. HCP will continue to share additional details as more information becomes available.
HCP provides the information in this blog for general guidance only. The content does not constitute legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other advisers. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied.