Earlier today (June 5), United States President Donald J. Trump signed into law changes to the Paycheck Protection Program (PPP) federal relief funding guidelines proposed in the now-stalled $3 trillion The HEROES Act to the benefit of businesses across America, following approval by the U.S. Senate on June 3 and by the U.S. House of Representatives on May 28.
As administered by the U.S. Small Business Administration (SBA), the guideline changes:
- Extend the PPP loan forgiveness period to include costs incurred over 24 weeks after a loan is issued or through December 31, whichever comes first. Businesses that received a loan before the measure is enacted could keep the current eight-week period;
- Extend to December 31 from June 30 a period in which loans can be forgiven if businesses restore staffing or salary levels that were previously reduced. The provision would apply to worker and wage reductions made from February 15 through 30 days after enactment of the $2.2 trillion federal Coronavirus, Aid, Relief and Economic Stimulus (CARES) Act, which was signed into law on March 27;
- Maintain forgiveness amounts for companies that document their inability to rehire workers employed as of February 15, and their inability to find similarly qualified workers by the end of the year. Under the modified measure, companies would be covered separately if they show that they couldn’t resume business levels from before February 15 because they were following federal requirements for sanitization or social distancing;
- Extend the deadline to apply for a PPP loan to December 31 from June 30;
- Require at least 60 percent of forgiven loan amounts to come from payroll expenses;
- Repeal a provision from the CARES Act that barred companies with forgiven PPP loans from deferring their payroll tax payments;
- Allow borrowers to defer principal and interest payments on PPP loans until the SBA compensates lenders for any forgiven amounts, instead of the current six-month deferral period. Borrowers that don’t apply for forgiveness would be given at least 10 months after the program expires to start making payments; and
- Establish a minimum loan maturity period of five years following an application for loan forgiveness, instead of the current two-year deadline set by the SBA. That provision would apply to PPP loans issued after the measure is enacted, though borrowers and lenders could agree to extend current loans.