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Jun 19 2020    Next issue: Jul 3 2020

More flexible PPP terms

      Congress and the Trump Administration have significantly loosened the terms of Paycheck Protection Program loans in recent weeks, even as the June 30th deadline for applying for the loans is quickly approaching.

      On June 3, Congress passed the PPP Flexibility Act to offer borrowers more latitude in how they use their PPP loans and to broaden the terms of loan forgiveness.

      On June 8, Treasury and Small Business Administration officials said SBA shortly would issue rules and guidance and modified applications for PPP loans and PPP forgiveness, to implement PPP flexibility act provisions, including:

  • Extending the covered period for loan forgiveness to 24 weeks, from 8 weeks, after the date of loan disbursement. Borrowers who received PPP loans before June 5 can still opt for the 8-week period;
  • Reducing to 60% the requirement that loan proceeds must be used for payroll costs; and reducing to 60% the requirement that the loan forgiveness amount must have been spent on payroll during the 24-week period. Previously, 75% applied;
  • Providing safe harbor for borrowers unable to return to the pre-Feb. 15 levels of employment due to compliance with federal guidance on customer or worker safety related to COVID-19 from March 1 to Dec. 31;
  • Providing safe harbor for borrowers unable to rehire individuals who were employees on Feb. 15 and unable to hire similarly qualified employees for unfilled positions by Dec. 31; and
  • Extending the deferral period for payments of principal, interest, and fees on PPP loans to the date that SBA remits the loan forgiveness amount to the lender (or 10 months after the covered period if the borrower does not apply for loan forgiveness);
  • Confirming that June 30, 2020 is the last date on which a PPP loan application can be approved.

      In addition, Treasury and SBA officials announced two significant clarifications to the flexibility act, according to an analysis by PilieroMazza PLLC law firm:

  • If a borrower uses less than 60% percent for payroll costs, the borrower will continue to be eligible for partial loan forgiveness, as long as at least 60% of the loan forgiveness amount was used for payroll costs; and
  • Increases to 5 years the maturity date of PPP loans approved by SBA on or after June 5. The date of SBA approval is the date that SBA issues the loan number. Previously, the maturity date was two years.

          The changes will be beneficial for borrowers, according to PilieroMazza PLLC law firm, especially the ability to receive partial loan forgiveness even if borrowers don’t reach the 60% quota. “This change will provide even more flexibility for companies to use PPP loans as they see fit,” PilieroMazza attorneys said in a statement.

          The extension to five years, from two years, for loan payback, also benefits loan recipients. “This change will also be welcomed by many borrowers, since it gives them much more time to pay back the loan,” PilieroMazza’s statement said.

          The changes will amend the PPP loan application issued on May 15 and the SBA’s interim final rule for the PPP program issued on May 22.

    More information:
    Loan application changes: https://bit.ly/2AZBxXW
    Interim Final Rule: https://bit.ly/2MP1RXj
    Treasury/SBA Press Release: https://prn.to/3e3Lqm9
    PilieroMazza: https://bit.ly/30BAJ62
    Crowell & Moring: https://bit.ly/3cQKf83
    Aronson LLC: https://bit.ly/30rhrAt
    UPDATE: SBA interim final rule (June 11): https://bit.ly/3frge0n

         

    • Inside this edition:

    More flexible PPP terms

    No appropriations yet for DOD Sect. 3610 payouts to vendors

    Small biz set-asides and sole source awards trending down

    Updated Coronavirus Resources for Small Business Federal Contractors

    EIDL problems hit small biz

    SDBs can self-certify

    WOSB certs start July 15

    Judge reviews ANC case

    Busy 4Q forecasted

    Column: CARES Act Sect. 3610 - Confusion and Shifting Sands

    Washington Insider:

    • Fed'l procurement hit $586.2B last year: GAO
    • Where's the FY2019 small biz scorecard?
    • SBA OIG says it saved taxpayers $18M


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