New rules regarding PPP loan forgiveness…
This past Wednesday night, the Senate unanimously passed House bill H.R.7010 revising the PPP loan forgiveness rules. The President is expected to sign the bill soon. The following changes are included in the new Paycheck Protection Program Flexibility Act:
- The spending period for approved PPP loan funding is being extended from 8 weeks to 24 weeks.This allows another 4 months of spending toward loan forgiveness.
- The minimum amount of funds that must be devoted to maintaining payroll has been reduced from 75% to 60%. This allows an increased percentage of specific non-payroll related items including mortgage interest, rent and utilities.
- The maturity on remaining loan amounts may be extended to five years by mutual agreement of the bank and borrower. The original PPP notes included a 2-year maturity.
We can’t be sure these are the final revisions to PPP loan forgiveness rules, but it’s pretty clear Congress is working to make loan forgiveness more favorable to borrowers. And that’s good news.
Given these revisions and the potential for additional changes, we recommend you hold off on completing the current Small Business Administration loan forgiveness application until new instructions and a revised application are issued.
It still makes sense, however, to track your weekly spending of PPP funds by major category.
– Number of Employees
– Health Insurance costs
– Retirement Benefits costs
Just remember, it appears the spending period will be extended from 8 weeks to 24 weeks.
We’ll be in touch again when the officially revised Forgiveness Application is released. We remain committed to communicating with you on a timely basis and encourage you to contact us at 603-352-1822 with any questions you may have.
Senior Vice President/ Senior Lender