What to Know about Paycheck Protection Program Updates

 

If you are an employer eligible for PPP loans, here is some important information to keep in mind.

Since its formation, the Paycheck Protection Program (PPP)—which was primarily established to extend forgivable loans to employers affected by COVID-19 with less than 500 employees—has been supplemented by guidance from the Small Business Administration (SBA) and the Department of the Treasury. Additionally, the Paycheck Protection Program Flexibility Act (PPPFA) revised portions of the original PPP, and the PPP Extension Act extended the program until August 8.

If you've received a PPP loan or may apply for one in the future, the following information can help you understand certain PPP deadlines and provisions.

Updates for Employers with Existing PPP Loans:

When should loans be repaid?
 
The PPPFA extended the minimum amount of time for loan repayments to five years for loans made after June 5, 2020. Loans that originated before that date will still be subject to a three-year repayment term, unless borrowers and lenders agree to extend the term to five years.
 
What is the deadline for using PPP loan proceeds?
 
The PPPFA extended the time borrowers must use PPP loans to the earlier of 24 weeks or the end of 2020. PPP borrowers are still able to use the original eight-week period.
 
Is there loan forgiveness?
 
The CARES Act provides for up to 100% loan forgiveness if the borrower meets certain conditions.*

Prospective PPP Borrowers:

When is the application deadline for new loans?
 
The PPP Extension Act—which was signed into law on July 3, 2020—extends the deadline for new PPP loan applications to August 8, 2020.
 
How does the SBA verify loan eligibility?
 
The SBA will accept the self-certification of a borrower that a loan request is necessary to support ongoing business operations. The SBA will assume that borrowers with loans of less than $2 million met the self-certification requirements.
 

To learn more, you can visit sba.gov or contact your local Mutual of America representative.

* To qualify for 100% loan forgiveness, the borrower must use at least 60% of loan proceeds for payroll and payroll- related expenses. Employer contributions made to a retirement plan (including a defined benefit pension plan) can be counted in determining the amount of loan forgiveness. The SBA also eliminated loan forgiveness reductions due to a reduction in workforce from February 15, 2020, to December 31, 2020, provided the borrower can document an inability to hire similarly qualified employees for unfilled positions on or before December 31, 2020; or an inability to return to the level of business activity that existed before February 15, 2020, due to compliance with requirements or guidance established between March 1, 2020, and December 31, 2020, by the Department of Health and Human Services, the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration relating to COVID-19 sanitation, social distancing, or worker or customer safety.
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