PPP Loan Forgiveness Law Change – 6/4/2020
PAYCHECK PROTECTION LOAN UPDATE
If you have not applied for the Paycheck Protection Program Loan – there is still time! Over $100 billion remains in the program, please contact us if you’d like to find out if you qualify.
Last week the House passed legislation to make some positive changes to the Paycheck Protection Loan program and last night the Senate passed the law by voice vote, clearing the way for the President’s signature which should occur at some point today. Below are the highlights of the law:
- Businesses can choose to extend the 8 week period to 24 weeks, or they can keep the original 8 week period. This flexibility is designed to make it easier for more borrowers to reach full forgiveness and not have to repay any of the loans.
- The new legislation changes the payroll expenditure requirement from 75% to 60% on payroll related expenses. This however comes with a stipulation that borrowers must spend at least 60% on payroll or none of the loans will be forgiven.
- The new legislation includes two new exceptions allowing borrowers to achieve full loan forgiveness even if they don’t fully restore their workforce by December 31st (Previously June 30th). In essence they have made the requirement to hire back your full workforce and pay them the same wages as prior to the pandemic essentially a non-hurdle as they have eased these requirements:
- If you are unable to restore your business to February 15th levels due to COVID-19 related operating restrictions than you no longer have to clear the full time equivalent calculations.
- Previous guidance already allowed borrowers to exclude from those calculations employees who turned down good faith offers to be rehired at pre pandemic levels. The new bill allows borrowers to adjust because they could not find qualified employee.
- Borrowers will now have 5 years to repay the loan instead of the original 2 years. The interest rate will remain at 1%.
- The bill will also allow businesses that took the loan to also delay payment of the business share of payroll taxes, which was previously prohibited under the CARES Act.
We believe there will also be a simplified forgiveness calculation from coming out based on all these changes so we suggest waiting to try and file for forgiveness until the Treasury issues revised guidance and forms based on these changes.
The changes outlined above should all have a positive impact on the forgiveness calculations and in many cases we may roll back some of the suggestions we had made to get forgiveness within the 8 week period now that the time period has been extended. While this has been a very frustrating process (lots of wasted time planning for rules that keep changing) the facts remain that many businesses have received these funds and are still in business today because of this program. This started as a simple program to help struggling businesses, got very complicated for a period of time, and is now getting back to the original more simplified program.
WORK-SHARE PROGRAM (UNEMPLOYMENT)
Given the changes to the Forgiveness calculations outlined above it may be worth revisiting the Work-share Program which is essentially part time unemployment. The work-share program is an alternative to laying off employees by allowing them to keep working, albeit at reduced hours. While your employee is working reduced hours, they are eligible to collect part of their wages as regular unemployment benefits.
In addition to Colorado unemployment, the employee would also be eligible to receive the $600 a week in supplemental Federal unemployment benefits even though they are only collecting partial unemployment. This program may end on July 31 st unless the program is extended by Congress.
Click hear to learn more about the program and if your business qualifies: https://www.colorado.gov/pacific/cdle/layoffassistance
ONLINE HR SERVICES
Eger Payroll Services partners with Mammoth HR for direct access to HR services. For only $10/month our payroll clients have access to an extensive database of HR related topics, and for only $40/month they have 24 hour full-access to call or message any HR questions that come up during the day or night. With many companies letting go, re-hiring, furloughing, and changing employee statuses there are a lot of questions that employers need help with. Let us know if you would like to learn more about our Payroll or HR Services. In the meantime, HERE is a great FREE resource to help with your Covid-19 Crisis Management questions.