Updates to PPP Loans: 5 Things To Know Now

June, 28 2020

The federal government has updated components of the Paycheck Protection Loan Program (PPP). The application period is still open, and the rules have changed (for the better) since I first started blogging about the issue. Let’s look at five things you need to know right now about what’s changed.

You Can Still Apply
If you have not done so already, you can still apply for a PPP Loan. If you were reluctant because of the requirements, it’s worth reexamining the rules. But don’t wait. All PPP loan applications must have an SBA loan number by June 30, 2020.

For more detailed criteria for who can apply, go to this link from the SBA, or we can set up a time to chat together.

If you haven’t applied and want to do so, be sure to use this revised application, updated on June 12, 2020.

  1. You have more time to use the funds: As of June 5, the period in which the funds must be spent was increased from eight to 24 weeks, or until December 31, 2020, whichever is first.
  1. The constraints on payroll use have changed: Originally, to have the PPP loan forgiven, small businesses were expected to use 75% of funds on payroll costs. However, many found that threshold restrictive, leaving too little room to spend the loan on other essential operating costs.

Now, the threshold is at 60% of payroll costs. Important to note: The 60% refers to the portion of spending that is forgivable, not a threshold to meet before applying for forgiveness.

  1. The payback period is extended for loans not forgiven: Originally, the PPP loan funds had a maturity of two years and an interest rate of 1%. Now, all PPP loans approved on or after June 5, 2020, have a five-year maturity. If you were approved or received your loan before then, talk to your lender about extending the maturity.
  1. You have more time to rehire laid-off staff: Originally, businesses were eligible for loan forgiveness if they rehired laid-off staff and put them back on their payroll by June 30. Now, you have until December 31, 2020 to rehire workers so those salaries can count towards forgiveness. Important to note: Loan forgiveness is not negatively impacted if you had to reduce your headcount because of certain criteria:
  • You were unable to rehire employees or hire similarly qualified employees for unfilled positions before December 31, OR
  • You were unable to resume normal business activity levels in that period because you were complying with the U.S. Department of Health and Human Services, the CDC or OSHA worker or customer safety requirements related to the COVID-19 pandemic.
  1. Bottom line: There’s a lot of new information to take in. The new rules provide more flexibility and opportunity. However, following those rules is key to making sure you can get the most in forgivable funds. Be sure to check the tools you need to identify, apply for, and utilize the best possible financial aid available through our Small Business Support and Resource Library. Or feel free to reach out to me with your questions.



Additional sources
Got a PPP Loan for Your Business? Here Are 3 Updates You Need to Know About 

New Changes Make It Easier To Have PPP Loans Forgiven: What To Know Before You Apply