On June 5, the President signed H.R. 7010 into law making several changes to the CARES Act’s PPP provisions. Among the highlights:
- The covered period for issuance of new loans is extended from June 30, 2020, to December 31, 2020 or until the funds allocated to the program run out. (As of June 1, 2020, approximately $90 billion in PPP loan funds remain available.)
- The forgiveness term for existing PPP loans is extended from 8 weeks after the date of loan origination to 24 weeks.
- The covered period for forgiveness of PPP loans is extended from eight to the earlier of (i) 24 weeks from the date of origination of the loan and (ii) December 31, 2020. This applies to all PPP loans.
- The minimum term for all new PPP loans made after 7010’s effective date is 5 years. Current SBA guidance specifies a minimum the term of two years. Existing PPP loans may be renegotiated, but neither lenders nor borrowers are required to do so.
- The date by which a borrower must demonstrate that it has eliminated a reduction in FTEs is extended from no later than June 30, 2020 to no later than December 31, 2020.
- The current requirement that at least 75% of the forgiveness amount must be for eligible payroll costs has been eased to 60%. Up 40% of the loan amount now may be used for payment of mortgage interest, rent or covered utility payment.
- The current 6-month deferral period for principal, interest and fees of PPP loans is extended to a term that commences on the date of origination and ends on the date that the determined forgiveness amount has been remitted to the applicable PPP lender.
The Avisen Legal team stands ready to assist businesses with applications for new PPP loans or execution of the existing and new compliance requirements under the Paycheck Protection Program. Call any or our attorneys for assistance.