On June 5th, 2020 a third Payroll Protection Program (PPP) was signed into law. The first PPP ran out of funding after two weeks and the second devoted more money to the program. This third iteration gives employers greater flexibility on how to spend the funds AND how to get those funds forgiven. Here are some key takeaways:
Loan Forgiveness Expansion If you wanted the loan forgiven, the original law gave borrowers 8 weeks to spend 75% of the loaned funds on ‘payroll’ (payroll is not just limited to wages the employee receives). That period has now been expanded to 24 weeks and lowers the threshold to 60%. If you do not meet 60% there is no loan forgiveness. To get your report of what constitutes ‘payroll’ please send an email to ppp@cardinal-services.com. If the original 8 weeks, 75% formula is more advantageous, and you took out a loan before June 5th, 2020, you may continue to use the original formula.
Full-Time Employee Counts Your time frame to restore your full-time employee count has been extended to December 31st, 2020. If you reduced your full-time employee count on or after February 15th, 2020, a reduced employee count will not be held against you when getting the loan forgiven, if you can show one of two things:
- 1. You are unable to rehire those staff and/or are unable to find similar staff, and
- 2. That you were unable to return to your full-time employee count because of CDC, HHS, or OSHA compliance. More is expected from the Small Business Association on the second point.
Payment and Loan Extension If you do not obtain 100% loan forgiveness, your first repayment is due 10 months after your forgiveness period. Additionally, the borrower and lender can now agree to a 5-year repayment plan still at the 1% interest!