Federal government announces changes to PPP loan forgiveness
Photo | Courtesy of the U.S. Capitol Visitor Center
The U.S. Capitol in Washington, D.C.
The federal government is loosening its guidelines on who and how business owners will be eligible for loan forgiveness under the $669-billion Paycheck Protection Program, U.S. Small Business Administration Administrator Jovita Carranza announced in a joint statement with U.S. Treasury Secretary Steve Mnuchin.
The changes come as part of the newly enacted Paycheck Protection Program Flexibility Act, passed by Congress on May 28.
By and large, the changes detailed in the announcement will provide lenience for employers who wouldn't qualify for PPP loan forgiveness because they are complying with COVID-19-related rules and regulations making it difficult for them to do so. This is particularly true for employers who are unable to bring on their typical level of full-time staffing, an example provided in the announcement.
Under the Flexibility Act, PPP recipients will no longer be required to spend 75% of their loan on payroll in order to qualify for forgiveness during the forgiveness eligibility period. Nor will recipients be required to have spent 75% of their forgivable portion of the loan on payroll. Both of those thresholds were lowered to 60%.
In the same vein, recipients now have a 24-week loan forgiveness period after their loan is disbursed, compared to the eight weeks previously offered.
The federal government will also provide loan recipients with what it termed a safe harbor from reductions in loan forgiveness if they are unable to rehire to their full capacity because of compliance with federal guidance related to COVID-19. The same harbor will be provided for employers unable to rehire or replace similarly qualified staff members by the end of the calendar year.
Other changes include extending the loan pay-back period to five years for those who are approved for loans on or after June 5.
The announcement reiterated PPP loans must be approved by June 30.
The PPP, which set aside about $669 billion across two rounds of funding since March, was intended to help businesses stay afloat as economic shutdowns and safety regulations related to the COVID-19 pandemic took their toll on business owners and their employees.
WBJ Web Partners
Most Recent
Most Recent
0 Comments