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COVID-19 Response: Paycheck Protection Program Updated

by Megan Roberts, Extension educator and Rob Holcomb, Extension educator, EA

The Paycheck Protection Program Flexibility Act of 2020, H.R. 7010, passed both houses of Congress on June 3, 2020 and signed into law on June 5, 2020. The law changes several provisions of the Paycheck Protection Program (PPP), in particular loan forgiveness procedures were updated.

In the coming weeks, we will provide you with new forgiveness application examples that reflect the law changes. In our examples, you will see several changes from the new law. Importantly, the June 5th revision allows for 60% or more being used for payroll expenses (and allows federal payroll tax to qualify as a payroll expense) and 40% or less being used for other eligible expenses. This is a welcome change from a 75%  payroll expense and 25% other eligible expenses that had previously been required. Furthermore, beneficial changes were made to the deadline requirements on the loans, the periods required for spending the money, and for safe harbor on any reductions to employee Full Time Equivalency (FTE) during the covered period.

Our first forgiveness loan example on sole proprietors without employees is available here.

Finally, we want to remind small business owners, including farmers, that PPP loans are still available. If you have not yet applied for a PPP loan, you still can by contacting a participating lender for more information. The time frame for using the funds and qualifying for forgiveness has been extended up to 24 weeks. Act now to access this important COVID-19 financial relief program.

JULY 2020 UPDATE: Since this blog was written the PPP deadline was extended beyond the initial date of June 30, 2020 by act of Congress to August 8, 2020. If you have not yet accessed PPP funds, there are dollars still available.  

Caution: This blog is offered as educational information. It does not constitute legal or financial advice. Please contact your lender or tax professional with questions. More information on our blog related to federal COVID-19 legislation, including more detailed info on PPP, click here. 

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