The SBA and Treasury released a joint statement announcing they will “promptly issue” rules and guidance, a modified borrower application form, and a modified loan forgiveness application implementing the amendments to the Paycheck Protection Program (PPP) brought about by the Paycheck Protection Program Flexibility Act, which was signed into law on June 5.
Key changes highlighted in the statement include:
- Extending the covered period for loan forgiveness from eight weeks to 24 weeks. Borrowers that have already received PPP loans retain the option to use an eight-week covered period.
- Lowering the requirements that 75 percent of a borrower’s loan proceeds must be used for payroll costs and that 75 percent of the loan forgiveness amount must have been spent on payroll costs during the 24-week covered period to 60 percent in each instance.
- Providing a safe harbor from reductions in loan forgiveness based on reductions in full-time equivalent employees for borrowers that are unable to return to the same level of activity as before February 15, 2020, due to compliance with requirements or guidance of the HHS, CDC, or OSHA related to worker or customer safety related to COVID-19.
- Providing a safe harbor from reductions in loan forgiveness based on reductions in full-time equivalent employees for borrowers that are both unable to rehire individuals who were employees on February 15, 2020, and unable to hire similarly qualified employees for unfilled positions by December 31, 2020.
- Increasing to five years the maturity of PPP loans approved by SBA on or after June 5, 2020.
- Extending the deferral period for borrower payments of principal, interest, and fees on PPP loans to the date that SBA remits the borrower’s loan forgiveness amount to the lender (or, if the borrower does not apply for loan forgiveness, 10 months after the end of the borrower’s loan forgiveness period).
The agencies also state the new rules will confirm that June 30, 2020 continues to be the last date on which a PPP loan application can be approved.