|
PPP Loan Forgiveness Period
Extended and Restrictions Eased
|
|
|
Late on Wednesday, June 3rd, Congress passed the Paycheck Protection Flexibility Act ("PPFA"). The PPFA brings important changes to the popular Payroll Protection Program (PPP) and will provide significant assistance to employers, particularly retail and restaurant businesses just now beginning to open.
The PPFA does two important things. First, it triples the amount of time allotted for PPP loan recipients to spend the funds and qualify for forgiveness from 8 weeks to 24 weeks. Under the original PPP, recipients could only receive forgiveness if they spent the funds in the 8 weeks following disbursement. That arrangement was problematic for businesses just beginning to open as they were unable to fully use the funds during the 8 weeks. This extension will provide significant relief to those businesses as they begin to reopen, but under social distancing and other conditions which will impact revenue. Borrowers can elect whether to keep the original eight-week period or extend to the 24 weeks.
Second, the SBA regulations required that 75% of the PPP funds must be used on payroll. The PPFA reduces that to 60% of the loan amount. This will provide relief to businesses in high rent areas, with Congress now recognizing that businesses who cannot pay their rent cannot also retain their employees. This change comes with an important catch, however. Businesses must spend at least 60% of the loan on payroll, or none of the loan will be forgiven. The prior regulations simply limited the forgiveness if the 75% threshold was not met. This restriction may be adjusted in future SBA regulations, but, for now, borrowers should be careful not to fall below that 60% threshold.
The PPFA contains other modifications to the PPP. These include easing the requirement that businesses fully restore their workforce, allowing forgiveness if employees turn down rehire offers and if businesses cannot restore their workforce to pre-pandemic levels due to government operating restrictions. Borrowers also have 5 years, instead of 2, to repay any non-forgiven amounts. Finally, businesses that took a PPP loan can now also delay payment of their payroll taxes under the CARES Act, which was originally prohibited.
In sum, the PPFA makes important and valuable changes to the PPP that will benefit most businesses. If you have questions about PPP, or any of the other COVID-19 related legislation, the lawyers at Farleigh Wada Witt stand ready to assist your business. Please contact us at 503.228.6044 or at any of the email addresses below.
|
Farleigh Wada Witt Business and Financial Services Attorneys
|
Kim McGair
's practice emphasizes a wide range of litigation matters including employment, commercial litigation, commercial collections, personal injury defense, and real estate litigation. She is an advocate for her clients and provides them with sensible advice and strong representation to protect their interests and help them achieve their objectives as efficiently as possible. Kim was selected by her peers for inclusion in the Best Lawyers in America® 2018-2020 for Commercial Litigation and to the Oregon Super Lawyers list 2019 for commercial litigation.
|
|
Hal Scoggins has been providing legal advice to credit unions since 1991, focusing on state and federal regulatory compliance, deposit and lending operations, contract and business matters, corporate governance, CUSOs, and all other aspects of financial service delivery. He frequently conducts seminars on legal matters for the Northwest Credit Union Association, Credit Union National Association councils, local chapters, and other trade groups.
|
 |
David Ludwig has more than 35 years of experience handling complicated business and financial matters. He represents small- and mid-sized companies and financial institutions in business transactions, corporate finance, commercial lending, and real estate matters. David recently served on the executive committee of the Business Law Section of the Oregon State Bar. He was by his peers for inclusion in the
Best Lawyers in America® 2019-2020 for Business Organizations (including LLCs and Partnerships).
|
 |
Brian Jolly
's
law practice focuses on corporate and general business matters, as well as estate and succession planning. With more than a decade of experience representing families, closely-held businesses, and non profit organizations, Brian brings considerable working knowledge in the areas of business formation, mergers and acquisitions, and internal and external disputes in a multitude of business and estate planning matters. Brian is a member-at-large on the Executive Committee for the Business Law Section of the Oregon State Bar.
|
 |
Dean Sandow
assists business owners, executives, professionals, families, family enterprises, and individuals plan for all stages of business and life, with an emphasis on creative use of entities, trusts, and planning techniques to maximize efficiency and tax savings and minimize administration. With a keen understanding of entity structure and management, Dean creates plans to enhance and manage assets for the client and for next generation or beyond. Dean was selected by his peers for inclusion in the Best Lawyers in America® 2018-2020 for Trusts and Estates and 2019-2020 for Corporate Law.
|
|
Paul Migchelbrink
maintains a diverse business practice advising clients in a number of industries on corporate and general business matters, real estate, intellectual property, commercial finance, and lending. He utilizes his broad and extensive experience to help his clients make sound strategic decisions and grow their businesses.
Paul advises clients on matters throughout the business life cycle, including the formation and financing of new business ventures, ownership and ownership transitions, mergers and acquisitions, equity and debt financing, business contracts, and the protection of trademarks and other intellectual property rights. Paul was selected by his peers for inclusion in the Best Lawyers in America® 2020 for Corporate Law.
Contact Paul at 503.228.6044 or [email protected]
|
|
Marisol McAllister's practice focuses on real estate, financial services, and business law. In her financial services practice she represents financial service providers on complex commercial lending and leasing transactions and with judicial and non-judicial real estate foreclosures. In addition, she was designated as one of the
Best Lawyers in America
® 2018-2020 for Real Estate Law.
|
|
Brian Witt represents credit unions and CUSOs on corporate, operational, compliance, executive compensation and financial service delivery matters. Practicing law for more than 30 years, Brian has vast experience working with credit unions at all levels from the teller line to the Board room. Brian has developed extensive compliance resources for member response management, vendor management and contract review, information security programs, security response guidelines, online delivery of financial services, and credit union consumer and business lending. He was s
elected by his peers for inclusion in the
Best Lawyers in America
®
2016-2020 for Financial Services Regulation Law
|
|
Gustavo (Tavo), Cruz, Jr. has more than 25 years of experience documenting and negotiating complex commercial loan transactions and workouts. Prior to law school, Tavo worked as a commercial lender and in commercial credit approval. He also has experience working in the special assets group of a major financial institution, so Tavo knows how important it is to properly document the loan on the front end. Tavo also has extensive experience in corporate, securities, and mergers and acquisitions transactions.
|
|
Megan Oshiro supports the firm's business, estate and succession planning, financial services and real estate practices. Megan's internship at Willamette's Business Law Clinic, Oregon DOJ in the Financial Fraud and Consumer Protection Section, and externship with the Adidas in-house counsel in Portland bring excellent skills and working knowledge to her practice.
|
|
|
