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PPP Loan Changes extending the 8 weeks to 24

Provisions of HR 7010 are as follows:

  • Extend the period within which a company's incurred costs qualify for loan forgiveness under PPP to 24 weeks after the loan is issued, or through December 31, 2020, whichever comes first. Loans issued before the bill's enactment could retain the program's current eight-week period if the borrower chooses.

  • Extend from June 30 until December 1 the period in which businesses can restore their previous staffing or salary levels and still qualify for loan forgiveness under PPP. Under the bill, the time period in which a company's staffing and salary cuts would apply as the baseline is from February 15 through 30 days after enactment of the CARES Act (which was signed March 27).

  • Lower to 60% the program's current requirement that 75% of a business's forgivable expenses come from payroll costs. The original version of HR 7010 eliminated the payroll-expenses requirement altogether, but that language was dropped in the House after objections from labor unions.

  • Create an "Exemption Based on Employee Availability" from the PPP's requirement that any loan forgiveness be reduced in proportion to the number of full-time equivalent employees the company does not restore. A company would be exempt from this requirement if it is able to document: 1) that it was unable to rehire people who were employees on February 15; 2) that it was unable to hire similarly qualified employees for unfilled positions on or before December 31; or 3) that it was unable to return to the same level of business activity it was operating at before February 15, 2020, because it complied with certain federal guidance or requirements "for sanitation, social distancing, or any other worker or customer safety requirement related to COVID-19."

  • Repeal a CARES Act provision that prohibited companies with forgiven PPP loans from deferring their payroll tax payments.

  • Allow PPP borrowers to defer their principal and interest payments until the Small Business Administration compensates lenders for any forgiven amounts. The program currently has a six-month deferral period. Borrowers would have at least 10 months after the PPP expires to start making payments if they don't seek loan forgiveness.

  • Extend the minimum maturity period for PPP loans from two years to five years following an application for loan forgiveness. This new term would apply to PPP loans issued after enactment of HR 7010, though the bill says nothing in it (or the CARES Act or subsequent PPP legislation) "shall be construed to prohibit lenders and borrowers from mutually agreeing to modify the maturity terms" of loans that were issued before then.

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