New PPP Loan Applications and Eased Forgiveness Rules Update

In a story that ran on June 10, 2020 from the NY Times entitled, $130 Billion in Small-Business Aid Still Hasn’t Been Used, "Thousands of companies that got loans have sent the money back, according to lenders. For some owners, the program’s terms were too restrictive; for others, the criteria for loan forgiveness was too murky."

The Senate unanimously passed a bill to extend the PPP loan application deadline to August 8, 2020. According to a published article that ran June 30, 2020 entitled, Senate passes extension of application deadline for PPP small-business loans "...There's approximately $130 billion in unspent money under the Paycheck Protection Program, which has prompted a discussion among lawmakers about what to do with the funds."

In an effort to address the apparent reticence of small business owners from pursuing a PPP loan, The U.S. Small Business Administration (SBA) along with the Treasury, released a revised loan forgiveness application for the Paycheck Protection Program (PPP), a new EZ application for forgiveness of PPP loans, as well as updated forgiveness rules.

Here are the top line PPP Loan Forgiveness Rule changes:

• Borrowers have the ability to extend the 8-weeks to 24-weeks for employee payroll costs.
• The use of funds for payroll expenses has been reduced from 75% to 60% of the total loan amount. In addition, the forgivable non-payroll expenses has increased from 25% to 40%. 
• The original deadline for penalties and calculations associated with workforce reductions has been extended from June 30, 2020 to December 31, 2020.
• The loan repayment period has been extended from 2 years to 5 years maintaining an interest rate of 1%.
• Borrowers are eligible to defer their percentage of Social Security payroll taxes for 2-years.

Our resource posts regarding small business loan rules, availability and breaking news will be updated as it is made available.