COVID-19 UPDATE: Latest PPP Guidance

by Mike DeBlasi | June 12, 2020 12:25 pm

The U.S. Small Business Administration (“SBA”)[1] and Treasury released the most recent Paycheck Protection Program (“PPP”) interim final rule (the “Rule”)[2] on June 10, 2020. This most recent rule concerns the Paycheck Program Flexibility Act[3], which President Trump signed into law last week. The Rule provides some additional guidance about how the new law modifying the initial PPP program will be implemented.

As a brief review, arguably the two most substantial changes in the PPP Flexibility Act were to lower the payroll spending threshold and to extend the covered period. Both changes were designed to enable more borrowers to qualify for full loan forgiveness. The forgiveness threshold for payroll costs was lowered from 75% to 60%. This change allows borrowers seeking full forgiveness to use more of the loan proceeds on authorized non-payroll costs, like rent and utilities. The other major change was to increase the forgiveness covered period from 8 weeks to 24 weeks. This should provide many borrowers an opportunity to achieve full forgiveness of the loan proceeds.

Some of the key takeaways from the Rule include:

Stay tuned for additional changes. Congress is still talking about further legislation, which might affect various aspects of the PPP program. For now, however, there are still PPP funds available. The application deadline is June 30,

[1][7] Whether intentional or not, this also explicitly extends the ban on applying for additional PPP loans. Without further legislative changes, all borrowers are limited to a single PPP loan through the current end of the program on December 31, 2020.

[2][8] Note, this provision also seems to conflict with the plain language of the statute, which eliminated any reference to an 8-week forgiveness period.

[3][9] Note that the rules are currently unclear about which principal payments would need to be made.

  1. U.S. Small Business Administration (“SBA”):
  2. (the “Rule”):
  3. Paycheck Program Flexibility Act:
  4. [1]: #_ftn1
  5. [2]: #_ftn2
  6. [3]: #_ftn3
  7. [1]: #_ftnref1
  8. [2]: #_ftnref2
  9. [3]: #_ftnref3

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