Great News about the SBA PPP!

Great News about the SBA PPP!

Ross Williams


Dear Treasurers, Finance Chairs and Pastors,

There is GREAT news about the Paycheck Protection Program (PPP) sponsored by the Small Business Administration! 

First - the PPP loan program still has funds available.  If you have not already applied, you can view a list of participating lenders here.

But the big news is that hours ago, the Paycheck Protection Program Flexibility Act of 2020 (PPPFA) became law.  PPPFA is intended to make it far easier for Borrowers to achieve loan forgiveness.

Because of these new rule changes, there will likely be a new "forgiveness application" issued by the SBA shortly.  If you haven't already submitted your forgiveness application, you should wait for the new version.
Below are some highlights from the new legislation: 

  • Extends "covered period" for PPP loan forgiveness:  The PPPFA extends the covered period from 8 weeks to the earlier of 24 weeks or December 31, 2020.  Borrowers who received loans before enactment can choose to extend the 8-week period or keep the original 8-week period. 
  • Extends safe harbor deadlines:  The PPPFA allows borrowers until December 31st, instead of June 30th, to restore any reductions in salaries or hourly wages, or full-time equivalency levels. 
  • Increases PPP loan maturity: The bill establishes a minimum loan maturity of 5 years (up from 2 years) on remaining balances of PPP loans.
  • Reduces payroll costs requirement to 60%:  Under the PPPFA, in order to receive loan forgiveness, a Borrower must use at least 60% - down from 75% - of the covered loan amount for payroll costs.  We expect to see additional clarification from the Treasury or SBA on how this will change the forgiveness calculation form, or whether the sliding scale will remain in effect.  (Previously Borrowers had to choose the smallest of three potential forgiveness amounts, of which the payroll cost requirement was one.) 
  • Amends loan forgiveness FTE exemption: The PPPFA amended the guidance to add exemptions from full-time equivalent (FTE) reductions in loan forgiveness if Borrowers: a) are able to document an inability to re-hire or hire qualified employees, or b) are able to document an inability to return to the same level of business operations as of February 15, 2020 due to compliance with COVID-19 restrictions.
  • Delay of payment of employer payroll taxes: The new legislation allows a PPP Borrower to utilize the deferral of the employer's portion of Social Security taxes (provided under Sec. 2302 of the CARES Act) regardless of loan forgiveness. Previously, Borrowers could only utilize the deferral though the date their lenders issued a decision on PPP loan forgiveness.