Huge news yesterday for all of us swimming in the PPP pool. Yesterday, the Senate passed H.R. 7010 that will bring forth dramatic changes to the PPP. This legislation now sits on the desk of the President for his signature. Specific language and additional guidance have yet to be released but the high points of H.R. 7010 are as follows:
- The 8 week covered period will be extended to December 31, 2020 or 24 weeks, whichever is sooner.
- 60% of PPP funding must be spent on payroll costs, leaving 40% available for other eligible non-payroll costs.
- For any PPP funding not forgiven, the loan terms can be renegotiated from a 2 year term to a 5 year term.
- Even with taking PPP funding, businesses now also have available to them the incentive to defer their share of social security tax until the end of 2021 (50%) and 2022 (50%).
- The time available to restore employees (FTE’s) or restore salaries will be extended to December 31, 2020.
- It will provide more flexibility for businesses regarding employee count reductions through the end of the year if your business continues to be adversely effected by the pandemic.
- You can still stay with the 8 week covered period if that is most advantageous to your business.
This is a good day. We could all use one for sure. As always there are still questions, for example, does the 100K annualized cap of 8/52 of the 100K for each employee still apply or now is 24/52 of the 100K eligible for forgiveness. Answers to these types of questions will be coming but for today, take a long, deep breath and begin to reassess your strategies for navigating your business through this process. Meadows Urquhart continues to stand ready to help you along the way. Please reach out with questions and requests for assistance. Take care and stay safe!
