Late Wednesday night, the US Senate passed a House-led bill to make changes to the Paycheck Protection Program. The new rules modify the forgiveness guidelines to attempt to make it easier for business owners. The new rules, which have not yet been signed into law by the President, do several things. The key changes include:
- Borrowers who have already received their loans can elect to extend the payment period from 8 to 24 weeks. New borrowers will have a loan period of either 24 weeks or from the date of the loan until December 31.
- The amount of the loan that must be spent on payroll is reduced from 75% to 60%.
- If less than 60% of the loan does not go to payroll, none of the loan will be forgiven. This changes the current sliding scale, and there is already discussion of a further amendment to bring the sliding scale back.
- Borrowers can use the 24 week period to restore their employees to pre-coronavirus levels, but this must be done by December 31.
- Two new exceptions are added for staffing issues. Previously, the only exception was for employees who declined a good-faith offer to return at the same position, hours, and salary. Now, exceptions are added for a business’s inability to find qualified replacement employees, and for businesses that are not fully at pre-coronavirus operations due to state and local government restrictions.
- New borrowers will have 5 years to repay the loan. Current borrowers can extend the repayment period if their lender agrees.
- Businesses that take PPP money will now be able to delay paying payroll taxes.
As with all of these updates, this information is subject to change. We continue to update our clients and colleagues as changes happen. We work with our business clients to keep them in the loop, as part of our business law practice. If we can help you, please do not hesitate to contact either Matt or Justin at 407-504-9725.
