Guidance Issued on the Paycheck Protection Program Flexibility Act

Payroll Protection Program Funds Are Still Available!

If the current economic uncertainty is affecting your business, there is good news, funds are still available under the Paycheck Protection Program. However, borrowers need to act quickly because the deadline to receive a loan number from the SBA is June 30, 2020, and the lender will need time to process the application.

 

For those whose loans are not fully forgiven, not everyone will receive an extension to the five-year maturity term.

Loans made before June 5, 2020, have a maturity of 2 years, unless borrowers and lenders mutually agree to extend the maturity of such loans to five years. For loans made after June 5, 2020, the maturity is 5 years.

 

A portion of my loan is not forgiven, when will I have to start making principle and interest payments on the loan?

If you submit your forgiveness application within 10 months after the end of your coverage period, you will not have to make payments until the SBA approves the loan forgiveness amount with your lender. Your lender will then notify you of the amount of forgiveness and the due date of your first loan payment.

Important: If the application is not made within the 10 month deadline, then loan payments may be due immediately.

 

I have already met my requirements for forgiveness under the original eight-week covered period. Do I have to wait for the end of the 24-week covered period?

The covered period for all loans is 24 weeks beginning from the date your PPP loan is funded. If your loan was made before June 5, 2020, you may elect to have your loan forgiveness covered period be the eight weeks beginning on the loan funding date.

 

The new guidance corrects the 60% payroll cost use it or lose it clause.

The guidance recognizes that the Flexibility Act provides that the borrower shall use at least 60 percent of the PPP loan for payroll costs to receive forgiveness. However, the guidance clarifies that this will be interpreted as a proportional limitation and not the dreaded cliff that everyone feared. If you do not meet the 60% payroll use requirement, your forgiveness will be proportionately reduced instead of being eliminated.

 


 

PPP Loan Forgiveness Documentation Checklist