Initial Regulations For PPP Flexibility Released
The Treasury Department and Small Business Administration released further regulations on the Paycheck Protection Program (PPP) last week. The latest release focused on measures included in the PPP Flexibility Act, which was signed into law on June 5th.
The interim final rule codified some of the changes that were made with additional guidance to be released at a later date. Some key highlights:
- Use of Funds: A minimum of 60 percent of forgivable funds must be used on payroll costs, with a maximum of 40 percent applied to non-payroll costs for forgiveness. Additionally, partial forgiveness is still available for those who do not meet the threshold.
- Loan Maturity: Provides a five-year maturity for loans made on or after June 5, 2020. For loans made prior to June 5th, borrowers and lenders may mutually agree to extend 2-year loans.
- Covered Period: Extends the loan forgiveness period from 8 weeks to the earlier of 24 weeks from the date of the first PPP loan disbursement or December 31, 2020. For loans made prior to June 5, 2020, borrowers may opt to keep the period at 8 weeks.
- Deferral of Loan Payments: The earlier of 10 months after the last day of the covered period or when the SBA remits the loan forgiveness funds to the lender.
Other areas addressed were FICA Tax Deferral as well as Safe Harbors on Employee Availability & Compliance. The Treasury Department also issued new borrower and lender forms to apply for PPP loans
To read the revised regulations in full, visit the Treasury Department’s website.
Be on the lookout for additional AmericanHort programming on PPP loans in coordination with K·Coe Isom.