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Congress Passes Changes to PPP Loans

Congress has passed H.R. 7010, a bill that dramatically alters several provisions of the Payroll Protection Program. Here are the highlights.

  1. Any loan proceeds NOT forgiven now have a FIVE year repayment period, up from two years originally.
  2. The “covered period” is now 24 weeks from the date of the PPP loan origination, rather than the original 8 week period. This is welcome news for most PPP borrowers. However, a borrower can elect to use the original 8 week period.
  3. The 25% cap for non-payroll costs is raised to 40%, which is significant for many borrowers. However, there is a potential trap here, so if this applies to you, please call us.
  4. Full Time Equivalents/Restore Salaries – As long as the FTEs or salary/hourly wages are restored to February 15 levels any time prior to the end of 2020, no reduction in forgiveness will be required. I do not know how this works when your covered period is up before the end of 2020, presumably details will be provided. 
  5. A PPP borrower can now defer the employer portion of Social Security taxes even though you have received a PPP loan, NO RESTRICTIONS. This is an interest free loan and something to consider if you are experiencing uncertain cash flow between now and the end of this year. You simply do NOT pay the employer portion of Social Security Taxes due on payroll issued going forward through December 31, 2020. Half of the unpaid balance is due by the end of 2021, the balance due by the end of 2022. Please contact us if this provision interests you.

President Trump has not yet signed this bill, he is expected to do so any day now. The bill also leaves some unanswered questions, which hopefully the SBA will address soon.

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