Congress has passed, and the President has signed, a bill extending the time your business has to spend PPP loan proceeds to qualify for forgiveness.  This is good news for businesses who are struggling to spend all the proceeds in the 8 weeks originally allowed.  Here are the highlights of the changes:

  1. Allows a business to choose either an 8 week or 24 week forgiveness period to spend the PPP loan proceeds on allowed expenses.  The original law only allowed 8 weeks.  The added flexibility allows businesses who are struggling to hire employees or haven’t fully reopened, more time to spend the loan on qualified expenses to qualify for full forgiveness. We assume that with an extended period, more payroll cost per employee will be allowed.  With the 8-week period, $15,385 per employee is the maximum allowed.  Using 24 weeks, that limit should increase to $46,154 per employee.
  2. Now you are required to spend a minimum of 60% (was 75%) of the loan proceeds on payroll costs, which includes gross pay, health insurance, retirement benefits, and state and local payroll taxes.  However, that is a now hard minimum so if you spend less than 60% of the loan proceeds on payroll costs, NONE of the loan is forgiven.  For example, if your PPP loan was $300,000, you must spend at least $180,000 on payroll costs.  If you don’t, then the entire loan must be repaid.  However, with the forgiveness period extended to 24 weeks, most businesses should be able to meet this 60% threshold.
  3. The June 30, 2020 deadline to restore your employee count to your pre-CV19 employee count is now extended until December 31, 2020.  Thus, you have more time to rehire employees who were laid off or hire new employees as replacements.  In addition, if you are unable to hire qualified employees or if you are unable to open your business to the same level of business activity as pre-CV19, due to compliance with government orders concerning sanitation, social distancing, etc. (bars and restaurants), then loan forgiveness will not be reduced if you can’t increase your employee count to pre-CV19 levels.
  4. Extends the repayment term on any portion of the PPP loan that is not forgiven from 2 years to 5 years, still at 1% interest.
  5. Allows your business to delay payment of matching social security tax, which was originally prohibited.  Keep in mind this is a delay, not a reduction in the required payment of payroll taxes.

In relation to #3 above, the SBA has provided some additional relief concerning employee count.  You do not have to count certain former employees towards your required employee count after you receive your PPP loan, so long as these former employees:

  1. Were laid off prior to receiving the PPP loan and were made a written offer to rehire, which was rejected by the employee,
  2. Voluntarily quit their job,
  3. Were fired for cause, or
  4. Voluntarily requested a reduction in hours, which you granted.

In order to exclude these former employees, you must document how they qualify for one of the exceptions.  Thus, get your employee files in order, including dates of occurrence.  We also suggest reporting this information to Wyoming Unemployment should any of them file for unemployment.

The SBA recently released a loan forgiveness application, but with the most recent law change, you must wait to see how they change the form to apply for loan forgiveness. We will inform you as changes occur, and as always, call us with any questions you may have. 

Finally, as mentioned in our email dated June 3, 2020, the Wyoming Business Council announced they will start accepting online applications for the Wyoming Business Interruption Stipend on Monday, June 8th at 10 am.  Go to www.wyobizrelief.org to apply.