By Tommy Greer
The Senate passed the House’s version of the PPP Flexibility Act last night as Schumer contended that the Senate risked “too much delay” if it amended the bill and then had to go to a conference committee with the House to hash out final legislation.
The bill now heads to President Donald Trump for his signature which is expected today.
THE HIGHLIGHTS
- Extends the eight-week period to 24 weeks or until the end of the year, whichever comes first. “Hooray, forgiveness for all!”
- New ratio would be at least 60% on payroll and no more than 40% on other costs (see technicality below)
- Five years, instead of two, to repay any money owed on a loan
- Extends June 30 deadline to rehire workers any time prior to or on December 31 and
- Allows companies that get loan forgiveness to defer payroll taxes.
WITH CLARITY ALWAYS COMES MORE QUESTIONS
The legislation as written would require companies to spend 60 percent on payroll or none of the loan would be forgiven. The bill states that “to receive loan forgiveness under this section, an eligible recipient shall use at least 60 percent of the covered loan amount for payroll costs…” Earlier in the day, Rubio said that was one of the “technical problems in the House bill that needed fixing.” He said he wanted it corrected.
There is also still opposition to moving the loan application date back from June 30 to December 31; looks like it will be June 30.
It is now assumed the maximum amount paid to any one employee that will be forgiven will be $46,153 (24/52 of $100,000) the bill does not make this clear, let’s hope that soon-to-be-released guidance does.
Will borrowers be required to wait until the end of a 24-week covered period to apply for forgiveness?
Will expenses paid with PPP funds be deductible? Right now the IRS says no.
Lenders are still asking for a simplified loan process.
Stay tuned…
