Amendments to The Paycheck Protection Program, H.R. 7010

On Friday, June 5, President Trump signed H.R. 7010, better known as the Paycheck Protection Program Flexibility Act of 2020. As the name suggests, the law grants greater flexibility to borrowers when it comes to qualifying for forgiveness. Here are some of the elements that will impact recipients the most, and likely motivate more businesses to apply for PPP funds.

Forgiveness Amendments
 
Forgiveness “covered period” extended to 24 weeks:  H.R. 7010 extends the “covered period” to the earlier of 24 weeks starting on the date the loan was funded  or December 31,2020.  This replaces the current “covered period” of eight weeks from the date of funding.  This is welcome news, especially for the shuttered businesses.  This is a retroactive change but existing PPP recipients can elect to keep the original eight week period for forgiveness.
 
Extension of safe harbors:  H.R. 7010 changes the date to bring the FTE (full time equivalents) from June 30, 2020 to December 31, 2020.  If you elect to keep the eight week covered period you can also elect to keep the June 30, 2020 deadline.  If you elect the later December 31, 2020 deadline you will push back your application for forgiveness date beyond 2020.  Hopefully the SBA will address this to prevent undue delays in forgiveness.
 
New rehire exemption:  H.R. 7010 provides two exemptions to the FTE requirement.  The calculation can be prepared without regard to an employee with a) a documented inability to get your employees who were employed on February 15, 2020 to return to work or to rehire similarly qualified replacements by December 31, 2020 due to b) a documents inability to return to the same level of business activity as before February 15, 2020, due to compliance with federal (NOT STATE and LOCAL) health and safety requirements.
 
75/25 rule: This is a big change.  H.R. 7010 changes the rule that 75% of the forgiveness available must be spent on eligible payroll coast.  That has been changed to 60% allowing for more of the forgiveness amount to be spent on other eligible expenses.  The legislation seems to say this is now a cliff test meaning 60% must be spent on payroll for any forgiveness.  However, in a joint statement Monday SBA Administrator Jovita Carranza and Treasury Secretary Steven Mnuchin clarified that partial loan forgiveness will also be available under the 60% threshold.
 
There are  a few other items in H.R. 7010 you can fine in this article.