Paycheck Protection Program Application Deadline Extended

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President Donald Trump signed a bill into law on July 4 giving small businesses that are struggling during the coronavirus crisis an additional five weeks to apply for a loan under the Paycheck Protection Program (PPP).

Under the Coronavirus Aid, Relief and Economic Security Act, Congress allocated funds to the PPP to help small businesses keep workers on their payrolls. Businesses are generally eligible if they employ fewer than 500 employees, though some larger businesses may be able to apply. The program initially accepted applications through June 30 and reopened on July 6 to continue accepting loan requests through Aug. 8.

We've rounded up the latest news on this topic from SHRM Online and other trusted outlets.

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Coronavirus and COVID-19

Determining Next Steps

The extended application deadline gives Congress more time to figure out how to provide additional aid to struggling small businesses as the coronavirus pandemic continues. About $130 billion in aid that was allocated to the PPP has not been spent, and lawmakers need to decide how to distribute the remaining funds. Treasury Secretary Steven Mnuchin has said that further aid for small businesses should be "more targeted" to businesses such as hotels and restaurants that have been hard-hit by the crisis. 

(Forbes)

Easing Loan Forgiveness Criteria

The PPP is meant to encourage businesses to keep their workers employed or quickly rehire them, and the Small Business Administration (SBA) will forgive loans if certain criteria are met. In June, lawmakers made changes to the loan forgiveness criteria based on complaints from employers that the existing rules were unfeasible. Under the Paycheck Protection Program Flexibility Act (PPPFA), employers have more time to use PPP loan funds and still apply for forgiveness. Instead of eight weeks, borrowers will now have 24 weeks from the disbursement of their loan to use the PPP funds, or until Dec. 31 when the program is now set to end. Borrowers that received loans before June 5 can still opt to use funds in the original eight-week period. The PPPFA also creates flexibility in the amount of loan money that must be used for payroll purposes. Employers now have to spend 60 percent—rather than the previous 75 percent—of PPP funds on payroll costs. 

(SHRM Online)

Applying for a Loan

Small businesses can apply through established SBA 7(a) lenders or other participating financial institutions, and additional regulated lenders will soon be approved to participate in the program. "You should consult with your local lender as to whether it is participating in the program," the SBA recommended. 

(Small Business Administration)

Loan Forgiveness Forms Available

On June 17, the SBA and the Treasury Department issued a revised, "borrower-friendly" loan forgiveness application, as well as a simplified form for borrowers that meet one of the following criteria:

  • They are self-employed and have no employees.
  • They didn't reduce employee wages by more than 25 percent and didn't reduce employee headcount or hours.
  • They experienced reductions in business activity as a result of health directives related to COVID-19 and didn't reduce employee wages by more than 25 percent.

The new forms were updated to reflect congressional changes to the loan program under the PPPFA, including the new 24-week coverage period. Both applications give employers the option of using funds in the original eight-week period, if their loan was made before June 5, or the extended 24-week period. 

(SHRM Online)

Check for Updates to FAQs

The SBA and Treasury Department continue to update their answers to frequently asked questions, so employers should check regularly for new insight on nuanced issues. For instance, do businesses owned by large companies that have the means to support ongoing operations qualify for a PPP loan? The guidance says "all borrowers must assess their economic need for a PPP loan under the standard established by the CARES Act and the PPP regulations at the time of the loan application. Although the CARES Act suspends the ordinary requirement that borrowers must be unable to obtain credit elsewhere … borrowers still must certify in good faith that their PPP loan request is necessary."

(U.S. Treasury Department)

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