Financial Advisory Blog

Armanino’s Financial Advisory blog is your source for thought leadership around cloud ERP and accounting solutions and integrations. Supported by the Cloud Accounting Institute and numerous experts in cloud, finance, reporting, integration, compliance, and technology, Armanino’s Financial Advisory blog features must-read content on what’s happening in the finance industry, case studies, white papers, and much more.

June 3, 2020

Senate Unanimously Passes PPP Changes — President’s Signature Expected Shortly

Posted by COVID-19 Rapid Response Team

Senate Unanimously Passes PPP Changes — President’s Signature Expected Shortly
In swift moves Wednesday, the Senate unanimously approved the bill passed last week by the House of Representatives that significantly modifies the Paycheck Protection Program (PPP) rules. With this action, the bill makes its way to the President’s desk for signature into law, which is widely expected.

Major changes to the PPP program include:

  • Borrowers now have 24 weeks to use their PPP funds, extended from the original eight weeks.
  • The forgiveness threshold requiring 75% of funds to be spent on payroll was lowered to 60%. However, where the prior rule allowed for graduated forgiveness if payroll costs fell below 75% of the total, the new, lower mark is a cliff that must be scaled to receive any forgiveness at all — for now.
  • The deadline for rehiring workers in order to qualify for safe harbor from the reduction factors was moved from June 30 to December 31.
  • Employers can exclude from the FTE Reduction Factor calculation any positions that, during the period between February 15 and December 31, they were unable to fill because they either could not find qualified employees to hire, or, could not restore their business to a comparable level of activity because of social distancing or other federal health guidance.
  • For new loans issued after this amendment takes effect, the payback period for any unused funds was extended from two years to five years, with repayments to begin upon receipt of a final forgiveness determination from the SBA. For existing loans, it is up to the borrower and lender to agree to an extension to five years.
  • Granting of forgiveness will no longer disqualify a business from electing to take payroll tax deferrals under the CARES Act.

Borrowers who have exhausted their entire PPP funds are not required to wait until the 24 weeks have passed to file their forgiveness applications. Those who are in this position may very well wish to get the debt off their books in case they will need additional bank financing, and/or get forgiveness before the rules change again.

Promises were also made to Sen. Johnson of Wisconsin that additional changes he wishes for the program can be implemented at a later date. So stay tuned for more changes to this program in the weeks ahead.

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