Here are some quick facts on Paycheck Protection Loan forgiveness! You don’t want to miss this info:
1. PPP borrowers can choose to extend the eligible period from 8 to 24 weeks from the date of the loan’s origination (or December 31, 2020, whichever comes earlier). They can also keep the original 8-week period.
2. The requirement that 75% of the loan is used for payroll is updated to 60%.
3. If a borrower fails to spend 60% of the loan on payroll costs, NONE of the loan is forgivable (before a portion was forgivable).
4. As long as the workforce level and wages are restored to February 15th levels prior to December 31, 2020 (instead of June 30, 2020), no reduction in forgiveness will be required. Additional exceptions to this also apply if a business is unable to comply.
5. A borrower can defer all of its 2020 Social Security tax to 2021 and 2022, EVEN IF the PPP loan is forgiven prior to December 31, 2020.
6. Borrowers MIGHT have 5 years to repay the loan instead of 2. This goes into effect for loans taken after the date of the bill. Loans issued prior to this bill are subject to modification by the bank.
1. The current per employee limit is $15,385. Will the limit be increased to $46,153 per employee to accommodate for the longer period?
2. Senators aren’t comfortable with the stipulation that if a borrower fails to spend 60% of the loan on payroll costs, NONE of the loan is forgivable. SBA might address this favorably.
3. Can the borrower apply for forgiveness after 8 weeks but before 24 weeks are over?
4. Effect on income tax reporting.