The ABMA is reporting on Congress passing a new bill amending the Paycheck Protection Program, which was established in March. President Donald Trump is signed the new bill into law on June 5, 2020. The bill, which passed with a bipartisan vote, makes the following amendments to the PPP to provide relief to borrowers:
- Loan repayment extension: The minimum loan term for unforgiven PPP loans has been extended from two years to five
- Payroll costs vs. nonpayroll costs: Relative to eligibility for forgiveness, the new bill reduces the ratio of PPP funds to 60% vs 40% for nonpayroll costs. Previously, the requirement was 75% to 25%.
- Extension for the coverage period: The period during which borrowers must spend the PPP funds has been extended from eight weeks to 24 weeks (from origination) to be eligible for forgiveness.
- Payroll tax deferment: Borrowers can defer payroll taxes without being penalized and remain eligible for loan forgiveness.
- Extension of rehiring safe harbor: The rehiring safe harbor end date has been extended by six months to provide borrowers with additional time to restore payroll levels or rehire employees without a reduction in the amount of forgiveness. The new date has been extended to December 31, 2020.
- Rehire/replacement exemptions: The bill also provides loan forgiveness eligibility exemptions for companies not able to rehire or replace an employee.
- Level of business: Additional loan forgiveness eligibility exemptions have been added for borrowers that are not able to return to the same level of business due to complying with COVID-19-related orders.