PPP and the Senate’s Success!
In the latest news of PPP happenings, the Senate passed HB 7010 with a whole lot of goodies for borrowers on its way to the President’s desk.
Extended Window of Reporting
Borrowers who have already taken out their loan will now have the option to elect 8 or 24 weeks as their applied forgiveness period, allowing more time for workforce expenses.
New Forgiveness Percentages
There will be increases to the current limitation on non-payroll expenses (such as rent, utilities, mortgage interest) for loan forgiveness from 25 to 40%.
The 75% payroll requirement was too rigid for many small businesses, particularly during the 8 week covered period where many businesses were completely closed due to stay at home orders. Additionally, the PPP includes provisions that incentivize maintaining staffing level outside of the SBA rule. However, the desire was expressed on both sides of the aisle to maintain some kind of minimum amount of PPP funds that should be expended on payroll, and small businesses felt that such minimums were more workable under the longer 24 week timeframe. So the legislation now amends the 75/25 rule to 60/40.
Re-Hiring and Safer Harbors
New Repayment Terms
The proposed legislation would also extend the period for repayment of loan amounts still owed after forgiveness from 2 years to 5 years, and an interest rate of 1%.
First Payment Deferral
Borrowers also receive extended payment deferral on principal and interest so that a borrower does not have to make a payment until forgiveness determination is granted by the SBA. Under SBA guidance, a lender has 60 days to process loan forgiveness and the SBA then has an additional 90 days to approve and grant forgiveness. Combined with the new 24 week period, this will now give borrowers up to 11 months of payment deferral.
These new provisions should provide increased clarity to PPP borrowers, and allow many to achieve full forgiveness on their loan. There are still questions in the guidance, but these new laws will be very helpful as we continue to work through the process.
Still haven’t applied? You still can!
The U.S. Small Business Administration released an updated Paycheck Protection Program Report with data through May 30. The latest data available showed that more than $138 billion in PPP funds were still available for small businesses and non-profits impacted by the COVID-19 pandemic.
We can help with your application. Contact us today!