8 ways the feds just made it easier for businesses to use PPP funds and get loan forgiveness

Changes approved today (June 5, 2020) to the Paycheck Protection Program (PPP) give businesses broader latitude in how to spend their loans and still qualify for forgiveness, as well as extending the time to use and pay back the money.

While the changes bring welcome flexibility to the program, it is still imperative that businesses carefully track and document how they spend their PPP funds to ensure they receive maximum loan forgiveness.

To help you manage your loan effectively, Boyer & Ritter partnered with Albin, Randall & Bennett CPAs (Portland, ME) to develop a workbook to assist businesses in managing their PPP loan. We are working now to update our PPP Loan Forgiveness Planning workbooks and will notify email subscribers when the new versions are posted. Additionally, we are ready to help you navigate through the at-times complicated requirements of the forgiveness program.

The following are eight key provisions in the PPP reform legislation:

1. The 8-week covered period for spending loan funds is now 24 weeks from the date loans are funded or Dec. 31, whichever comes first.
   • Borrowers who received their loans before today’s changes can elect to retain their original eight week covered period.
2. The requirement to spend at least 75 percent of the loan on payroll costs for maximum forgiveness is now 60 percent.
3. The minimum loan maturity for new loans is now five years and the maximum is 10 years. Existing loans have two-year maturities. Borrowers and lenders can mutually agree to modify the maturity of existing loans.
4. The safe-harbor — or rehire provisions — is extended to Dec. 31. It was June 30.
5. Several exemptions for the FTE provisions for employees that terminated their employment for various reasons or reduced their hours have been added, including:
   • The borrower is unable to rehire an individual who was an employee of the eligible recipient on or before Feb. 15 AND
   • Can demonstrate an inability to hire similarly qualified employees on or before Dec. 31; or
   • Can demonstrate an inability to return to the same level of business activity as such business was operating at prior to Feb. 15 due to safety compliance standards
6. The deferral period for principal, interest or fees has been extended to the date the forgiven amount is remitted to the lender.
7. Borrowers must apply for loan forgiveness within 10 months after the last day of the covered period. The deadline to apply for forgiveness was not previously defined.
8. Borrowers can get employer payroll tax deferral regardless of their PPP loan forgiveness.

Unfortunately, the new legislation does not include a “tax-free” treatment of PPP loans. If this is approved, we expect it will happen toward the end of the year.

The Boyer & Ritter team continues to stay abreast of the latest regulatory changes, and we are available to help your business with everything from applying for a PPP loan to assisting you with the loan forgiveness application.

Jay A. Goldman, CPA, is a principal with Boyer & Ritter LLC. His primary responsibilities include PPP consulting as well as servicing the accounting, tax and consulting needs of the firm’s auto dealership clients.