PPP Business Loan Guidelines

ABPA has highlighted some points of interest for Business Owners who would like to apply for the PPP business loan prior to the June 30, 2020 deadline. Here are the new guidelines for the PPP loan forgiveness:

  • The period to spend the loan proceeds has been extended from 8 weeks to 24 weeks (date is determined by receipt of the loan proceeds)
    • The 24-week option is your safest bet. However, you can still elect the 8-week option if:
      • All of the money has been spent
      • You have enough payroll expenses to meet the 60% requirement
    • The requirement to spend 75% of loan proceeds on payroll expenses has been reduced to 60%.  The remaining 40% can be used for rent, utilities (gas, electric, water, telephone, internet, transportation) or interest on asset loans that are secured by specific assets (a line of credit with a blanket collateral does not qualify).
    • The comparison date for the number of Full Time Equivalent employees (“FTEs”) has been extended from June 30 to December 31
    • There is a new exemption for employee availability.  By December 31, 2020, if a store has not been able to fully return to pre-pandemic levels of business specifically due to COVID related requirements from the Department of Health, the CDC or OSHA, then the hiring requirement will be reduced (for example, if the 6’ social distancing rule is still in effect which limits seating capacity)
    • The calculation period for loan forgiveness is either the 8-week period or the 24-week period, nothing in between.  The calculation is the average number of FTEs for the coverage period divided by the FTEs for the reference period prior to COVID, which equals the % of the loan that will be forgiven.   If the number of FTEs is equal to or greater on December 31 than it was during the reference period, the total loan will be forgiven
    • Any portion of loans not forgiven will be repayable over 5 years at 1% interest, subject to bank approval.  Loan payments will begin 6 months after the date of forgiveness calculation or 10 months after the end of the covered period (October 31 if December 31 is the covered period end)
    • Payroll taxes during the covered period may be deferred from the forgiveness date with 50% payable on 12/31/21and 50% on 12/31/22
    • Any company contributions to a 401k plan made in 2020 (even if they were for 2019) may be included in payroll expenses

Here is the link to full guidelines and details: www.SBA.gov