New Legislation Could Help Business Owners with PPP Loan Forgiveness Process

After being approved by the senate early last week, House Bill 7010 was signed into law by the President on June 5th, 2020. This bill triples the amount of time allotted for small businesses to spend PPP loan proceeds and affords additional flexibility.

The two primary provisions are:

  1. Borrowers now have 24 weeks to spend funds received under the PPP loan program – up from the original 8 weeks.
  2. The requirement to spend at least 75% on payroll and payroll related costs has been lowered to 60%. The bill institutes a cliff which states that none of the loan will be forgiven if less than 60% is spent on payroll expenses. The original bill had a sliding scale. This could be adjusted to the sliding scale through technical tweaks.

Additional elements include:

  1. Borrowers now have until 12/31/2020 to restore workforces to pre-pandemic levels in order to receive full forgiveness.
  2. Two new exceptions provide additional flexibility for forgiveness if employment is not fully restored: A. if employers cannot find qualified employees and B. if operations are unable to be restored to 2/15/20 levels due to COVID-19 related operating restrictions.
  3. The terms of unforgiven amounts are now stretched from a 2-year repayment schedule to 5 years.
  4. Borrowers are eligible for a deferral of the employer share of payroll taxes for two years (half due in 2021 and half due in 2022).

And, as we’ve shared previously, there is still more than $100B of PPP loan availability. If you haven’t yet applied and otherwise are eligible, we encourage you to meet with your banker to complete an application.

We will continue to update you on the PPP loan process as we receive new information. If you have any questions based on this new information, please do not hesitate to reach out to your advisor.

 

 

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Brion Collins, CFP®, CLU, ChFC®

Brion Collins is a managing director and head of our Delafield, Wisconsin office.