The Payroll Protection Program (PPP) of the Small Business Administration’s debt relief efforts during the Covid-19 Pandemic, have had numerous challenges since it was first introduced, and there has been numerous updates, sometimes weekly. However there have been sweeping changes implemented today by Congress, with more expected to still be introduced.
Today, there have been a number of updates which were signed into law today, and are outlined below, which take effect on the date of the bill’s enactment and apply to all PPP loans made on or after, with the government guaranteeing the remainder of the loan. The following items have been outlined by the National Association of Tax Professionals regarding the changes loan holders need to be aware of.
- the PPP lifespan from June 30, 2020, to December 31, 2020, for using loan proceeds
- extending the period during which businesses may spend PPP loan funds from eight weeks after issuance to the earlier of 24 weeks after issuance or December 31, 2020 (though eligible employers may elect to retain the eight-week period instead)
- specifying that PPP loans can be forgiven even if the number of full-time employees decreases, as long as the employer can prove: it attempted to rehire the same number of employees, but its former employees were unavailable; similarly qualified were unavailable; or its business is unable to return to the same level of activity it had before February 15, 2020
- lowers the amount that must be spent on payroll to be eligible for forgiveness from 75% to 60%
- allowing all employers to take advantage of the CARES Act deferral of the 6.2% employer portion of Social Security payroll taxes, regardless of whether they have had a PPP loan forgiven
With 4.5 million businesses receiving approval for loans totaling $510.6 billion, there is still currently $130 billion remaining available for loans.
Dwayne J. Briscoe
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