PPP Loan Forgiveness Terms Loosened

While there have been stumbles along the way, the Paycheck Protection Program is starting to ease restrictions on its terms of use and finally cater to the needs restaurants and other business owners need to achieve the all-important loan forgiveness.  On June 3, 2020 the Senate passed the House-passed bill which saw PPP loan forgiveness terms loosened in the Paycheck Protection Program Flexibility Act. Now that President Trump has signed this bill into effect, business owners across the U.S. can give a huge sigh of relief. Here are the changes that the PPP Flexibility Act implemented to provide more opportunities for loan forgiveness and repayment.

• The ratio to spend on payroll went from 75% to 60% with 40% allowed to be spent on other overhead costs like rent and utilities.

• Instead of being limited to spending funds and rehiring employees within 8 weeks after receiving funds, borrowers now have 24 weeks or until December 31, whichever comes first.

• The initial PPP loan forgiveness terms only allowed for businesses to exclude employees from their forgiveness amount who turned down a good faith offer to be rehired at the same hours and wages they received before February 15, 2020. The Flexibility Act adds in the ability to adjust the amount because they cannot find qualified employees for unfilled positions on or before December 31, 2020 or are unable to return to the same level of business activity prior to February 15, 2020 due to COVID-19 compliance requirements.

• Businesses that received PPP funds are now eligible to delay paying their payroll taxes which was not an option for borrowers under the original CARES Act.

• The maturity of the PPP loan has been adjusted from two years to five years with the same 1% interest rate for borrowers who receive there PPP funds after passage of the Flexibility Act or if existing PPP borrowers can reach an agreement with their lenders for an extension.

• Borrowers now have up to 10 months to apply for loan forgiveness verses 6 months giving businesses the time needed to gather information to complete the loan forgiveness application.

If you haven’t applied for a PPP loan yet, there are still funds available but time is running out to apply for funds. While the Housed tried to extend the application deadline to December 31, 2020, the Senate did a strikethrough on this and the deadline is still June 30. If you have already received PPP funds, these edits to the Paycheck Protection Program will hopefully give you the assistance you need to reach 100% loan forgiveness and see your business through this weathered time.

If you are forecasting that your PPP funds won’t be able to carry your business through the next few months while you’re ramping back up to 100%, we’re here to help. We understand that new expenses are arising daily and they are making it hard for you to put your focus on the task at hand, running your business open while navigating these uncharted times. If you need working capital to adapt your business or restaurant to post-pandemic standards, we’re still open and lending so you can continue fighting for your business. Contact one of our loan consultants in your area to get started with an offer. We promise to be with you every step of the way even after your loan funds to give you the expert advice you need to keep going.