HR 7010, officially called the Paycheck Protection Program Flexibility Act of 2020, has been signed into law. This bill covers a lot of ground, including changes and guidance on the loan forgiveness process. The passing of this bill impacts everyone that received funds under the Paycheck Protection Program.
You can read the official bill language, but here are some of the highlights:
- New loans have a 5-year term instead of 2, as it is currently. Existing loans can be adjusted if both parties agree to the change.
- The ‘covered period” has increased from 8 weeks to 24 weeks.
- Employers that received their loans prior to June 5th, may opt to use the original 8-week ‘covered period’ if they choose.
- Employers have until December 31st of this year to restore employment and salary to furloughed employees and still qualify for full loan forgiveness. Additional exemptions to reduction in loan forgiveness have been included as well.
- The ‘payroll costs’ requirement has been lowered from 75% to 60%. Therefore, up to 40% of this can be used for rent, utilities and mortgage interest.
- Payments are automatically deferred until the SBA remits the forgiven amount to your lender or 10 months from the end of your covered period if you haven’t submitted your forgiveness application
- Employers seeking loan forgiveness are no longer exempt from Section 2302, which allows the deferral of Social Security taxes.
The loan forgiveness process is on top of many people’s minds right now, which is why we’ve been working to help our clients through the process. We updated our SBA Loan Summary Report to help clients in their planning process. This includes some critical insights that can help with the loan forgiveness application process. All clients can log in and visit the blog section to read all the details.
Additionally, we’re creating a webinar that will help answer common questions about the loan forgiveness process. While we don’t have an official date yet, we’re planning for either June 18th or 25th. Our clients will get registration information as soon as it is available, but we will also post information here as well.
The material presented here is educational in nature and is not intended to be, nor should be relied upon, as legal or financial advice. Please consult with an attorney or financial professional for advice.
