Congress Passes Bill Expanding PPP Forgiveness Provisions

Dear WANADA Members,

Last night, the U.S. Senate signed off on the Paycheck Protection Flexibility Act, which will create some important changes to the SBA's Paycheck Protection Program. The House of Representatives passed the legislation earlier this week by a vote of 417-1. President Trump is expected to sign the bill soon, and we will provide you with the pertinent guidance, updated forgiveness documents, and other relevant details once the bill becomes law.

Based on the published bill summary, some of the major changes to the PPP that are authorized in this legislation include:
  • Provides PPP borrowers the option to spend their forgivable loan funds over a 24-week period, as opposed to the original requirement that all funds must be spent within eight weeks. 
  • Businesses now have the full 24-week period to rehire employees to pre-pandemic levels, under the terms required for loan forgiveness.
  • Extends the period for which forgiven funds can be spent to December 31, instead of the original June 30 end date for the program.
  • Just 60 percent of a recipient's PPP funds now have to be spent directly on payroll costs, as defined by the Treasury Department, down from 75 percent.
  • Allows businesses who took a PPP loan to also defer payroll tax payments, which had originally been forbidden under the original CARES Act
  • Extends, by 10 months, the deferral period for repaying back non-forgivable portions of a PPP loan. Borrowers now also have five years to repay the non-forgivable portions of the loan, instead of just two. The 1 percent interest rate on the loans remains in effect.
Please note that June 30 remains the deadline for applying for a PPP loan. As of May 30, more than $510 billion in SBA 7(a) Loans had been approved through the program, but tens of billions of dollars remain available. This latest bill does not provide any additional funds for the program.

We are aware that these extensions may present some problems for businesses who were early PPP recipients, and who spent their funds anticipating that the parameters of the program would not change; we will provide you with any additional guidance from the federal government regarding those issues as soon as they are published.

Similarly, our friends at the National Automobile Dealers Association have said they will be providing a full overview of the PPP changes once President Trump signs this extension into law, and we will be sure to provide you with their guidance as well. You can find a wealth of business-focused resources at WANADA's COVID-19 Information Library, which we will update with new PPP guidance once it is published.

Please let me or Joe Koch, our Vice President of Operations ( jk@wanada.org), know if you have any questions. 

Sincerely,
  
John O'Donnell
WANADA President and CEO