Extension of PPP Covered Period
The Treasury Department and the Small Business Administration have announced that they will revise the loan forgiveness form and other guidance for the Payroll Protection Program (“PPP”) to reflect new legislation that was enacted last week.
The Payroll Protection Program Flexibility Act of 2020 was enacted on June 5, 2020. The law extends the covered period for the Payroll Protection Program (“PPP”) from 8 weeks to 24 weeks, meaning that employers who received PPP loans can count qualified expenses incurred during the 24 weeks following the funding of the loan when determining the amount of the loan that will be forgiven (up from 8 weeks under the original law that was enacted on March 27, 2020).
In addition, employers can use up to 40% of the loan proceeds for payment of mortgage interest, rent or utilities (up from 25% under the original rules set forth by the Small Business Administration).
The new law also allows employers 24 weeks to restore the headcount of their employees back to the levels from before the pandemic began, provides new exceptions for employers who do not fully restore the headcount of their employees, and allows employers who do not receive full forgiveness to pay back the loan over five years (up from the two years set forth in the original law.)