New Guidance for PPP Loan Forgiveness

President Trump signed a bill to extend Paycheck Protection Program loans, from covering eight weeks of payroll to 24 weeks for small businesses. The bill also reduces the amount businesses have to spend on payroll to be forgiven, to 60% from 75%. The Treasury Department and Small Business Administration released new guidance on how enterprises can get their PPP loans converted into a grant, including a stipulation that owners will not be penalized if previous employees rescind an offer to be rehired. Small businesses have found themselves competing with unemployment benefits, which in many cases pays workers more than their original wages.

Trump said the legislation “will especially help restaurants, hotels and other businesses that have been very hard hit by the virus.”

The bill: 

  • Cuts the share of aid recipients need to use on payroll to 60% from 75%

  • Allows businesses to use the money for six months instead of two months 

  • Extends a June 30 deadline for companies to rehire employees 

  • Gives loan recipients a longer period of time to repay the loans 

  • Lets companies receiving loan forgiveness defer payroll taxes 

Robert Martin