HR 7010, officially called the Paycheck Protection Program Flexibility Act of 2020, has been signed into law. This bill modifies provisions related to forgiveness of loans made under the Paycheck Protection Program. The language of the bill covers a lot of information and includes guidance on the loan forgiveness process. The passing of this bill impacts everyone that received funds under the Paycheck Protection Program.
You can read the official bill language, but some of the highlights include:
- New loans have a 5-year term instead of 2, as it is currently. Existing loans can be adjusted if both parties agree to the change.
- The ‘covered period” has increased from 8 weeks to 24 weeks.
- Employers that received their loans prior to June 5th, may opt to use the original 8-week ‘covered period’ if they choose.
- Employers have until December 31st of this year to restore employment and salary to furloughed employees and still qualify for full loan forgiveness. Additional exemptions to reduction in loan forgiveness have been included as well.
- The ‘payroll costs’ requirement has been lowered from 75% to 60%. Therefore, up to 40% of this can be used for rent, utilities and mortgage interest.
- Payments are automatically deferred until the SBA remits the forgiven amount to your lender or 10 months from the end of your covered period if you haven’t submitted your forgiveness application
- Employers seeking loan forgiveness are no longer exempt from Section 2302, which allows the deferral of Social Security taxes.
The loan forgiveness process is foremost on many people’s minds, so we’ve been working on a few things to help our clients. The first is an updated SBA Loan Summary Report. This report is for planning purposes, offering key insights that can help with the loan forgiveness application process. All clients can log in and visit the blog section to read all the details.
We are also putting together a webinar that will help answer common questions about the loan forgiveness process. While we don’t have an official date yet, we’re planning for either June 18th or 25th. Clients will get registration information soon, but we will also post information here as well, so check back often.
The material presented here is educational in nature and is not intended to be, nor should be relied upon, as legal or financial advice. Please consult with an attorney or financial professional for advice.