The Small Business Administration advised lenders on July 23, 2020 that PPP Loan forgiveness applications will not be accepted until August 10, 2020. This date is subject to extension if any new legislative amendments to the forgiveness process necessitate changes to the system. Many borrowers who have qualified for the PPP loan proceeds have already completed their specified “covered period”, meaning they have spent their loan proceeds and wish to submit their forgiveness application as soon as possible. Borrowers should still prepare for application submission, even though the applications will not be accepted at this time. This short blog will inform borrowers on the upcoming changes in legislation and assist in preparation for applying for PPP Loan Forgiveness.
Pending Legislation May Modify Requirements; Final Guidance to Follow Enactment
Details released by the U.S. Senate on July 23rd indicate that pending legislation intended to offer further support and economic stimulus to address the COVID-19 pandemic will likely include several changes to PPP loan forgiveness measures, including simplified procedures for loans under $150,000 and under $1 Million.
Paycheck Protection Program Flexibility Act (PPPFA) Facilitates Forgiveness Measures
On June 5, 2020 The Paycheck Protection Program Flexibility Act was signed into law. Borrowers now have 24 weeks to utilize the proceeds of their PPP Loan, this can include borrowers who have received their loan prior to June 5, 2020. This law was passed to better ensure that borrowers do in fact receive forgiveness for their loans for more information on changes to the forgiveness guidelines please refer to HR Wise llc Blog Post, Changes to the PPP Loan: 6 Key Features.
As a reminder, under the PPPFA loan repayments for any amounts not forgiven are not required until ten months after the expiration of a borrower’s covered period. PPP loan repayment terms were also extended from two years to five years.
The PPPFA facilitated PPP loan forgiveness by providing that loan forgiveness will not be reduced based on an inability to rehire employees if the employer can document (1) written offers to rehire individuals who were employees of the organization on February 15, 2020; or (2) an inability to hire similarly qualified employees for unfilled positions by December 31, 2020. For best practices to better ensure loan forgiveness please refer to HR Wise llc Blob Post : What You Need to Know About Your PPP Loan.
While waiting for final program guidance, borrowers should continue to gather documentation demonstrating how PPP loan proceeds were used, including mortgage interest, rent payments and utilities. HR Wise llc is closely monitoring the possible upcoming federal legislation on this loan program.
Resources from HR Wise llc
HR Wise llc is committed to assisting businesses with increased compliance requirements resulting from rapidly evolving legislation. Our goal is to help minimize your administrative burden across the entire spectrum of employment-related payroll, tax, HR and benefits, so that you can focus on running your business. This information is provided as a courtesy to assist in your understanding of the impact of certain regulatory requirements and should not be construed as tax or legal advice. Such information is by nature subject to revision and may not be the most current information available.
Please refer to HR Wise llc Blog Posts for assistance in applying for the loan, applying for forgiveness and recent legislation passed surrounding the Paycheck Protection Program.