Additional changes to PPP loans were passed by the Senate last night and are expected to be signed by the President. The following changes will apply to all PPP loans (with one optional exception discussed later).
· The loan covered period was extended from 8 weeks to 24 weeks.
· The minimum loan percentage that must be used toward payroll costs decreased from 75% to 60%; the remaining 40% can be spent on allowable non-payroll costs. (Note: as currently written, at least 60% of the total loan must be spent on payroll for any money to be forgiven. There may be a future technical correction coming related to this.)
· The safe harbor period for reinstating levels of employment has been extended from June 30, 2020 to December 31, 2020.
· There are new exceptions for restoring the number of full-time equivalent employees. There is no longer a reduction if either of the following can be documented:
o You are unable to rehire the individuals who were employees on February 15, 2020 and cannot hire a similarly qualified employee(s) by December 31, 2020.
o You are unable to return to the same level of business activity as of February 15, 2020 due to specific factors related to COVID-19, as outlined in the Act.
There is also an optional exception written into the Act that allows anyone who already had a PPP loan before this Act was effective to use the 8 week period instead of extending the period to 24 weeks.
Please contact us with questions you have. We are happy to discuss how these changes will specifically impact your PPP loan and can help you determine if applying for a PPP loan is beneficial to your business situation. June 30, 2020 is the cut off for applying for a PPP loan.