Latest P3 Changes Make Getting Loans Easier For Employers
There’s good news for those who missed a Paycheck Protection Program (PPP) loan the first time around: The program has been extended to eligible businesses, with key updates designed to correct some of the initial issues. that affected the original plan.
The PPP was created by the Trump administration to provide small business loans as financial assistance during the Coronavirus pandemic.
When the PPP was launched, it was criticized for its vague language and rigid rules who dictated how and when companies could use the money. The initial program, established by the CARES Act, provided funds to selected businesses that were to be used within eight months. In addition, 75% of the loan was to be used to cover the payroll. The unforgiven portion of the loan was to be repaid within two years.
Recently, a CNBC article reported that over $ 500 billion has been distributed over 4.6 million loans to various employers. However, many businesses could not get a loan, so these employers felt cheated and needed more help. You may have been among them.
After numerous revisions to the PPP, most employer concerns were resolved, and with around $ 130 billion in P3 loans still unclaimed by businesses, Congress extended the deadline, and the government accepts new applications until August 8, 2020.
New law adds flexibility for PPP
To make it easier for businesses to claim their share of this money, the House and Senate have relaxed several PPP requirements. by adopting the Paycheck Protection Program Flexibility Law (PPPFA) in early June 2020.
One of the most significant changes implemented by the PPPFA was that only 60% of the money that businesses receive from loans is now required for salary expenses, instead of 75%. This change was designed to give employers the freedom to spend the funds on other important expenses, like rent or utilities, which may be more urgent than payroll.
Another update implemented by the PPPFA is that businesses now have 24 weeks to spend the money loaned to them, not eight weeks as before, which gives them until the end of 2020.
This means that employers now have more time to make decisions about how to spend the money, and it also allows those that may still be closed for businesses to spend funds after they reopen, when they could. need more.
Loan cancellation and more
On the loan cancellation, under the PPPFA, employers don’t have to wait until the end of the initial six-month period to apply – they can now do so after eight weeks. This way, companies can get forgiveness sooner and make financial decisions accordingly.
In addition, the repayment term for PPP loans has been extended from two to five years. This additional flexibility can be crucial for struggling businesses that will need time to recover.
The PPPFA also gives employers more time to rehire workers who are made redundant or on leave, which is necessary for loan cancellation. While the original rehiring deadline was June 30, 2020, it has now been extended to December 31, 2020. There is also relief available for companies that cannot restore their workforce to previous levels by due to the impact of the coronavirus.
Ultimately, despite a rocky start for PPP, many agree that adopting PPPFA is a step in the right direction and a sign that the government is listening to the concerns of small businesses across the country. .
Additional information available
Loans are always available for employers interested in claiming now. To learn more about what PPPFA means for your business, how to determine if you are eligible for a loan, and what actions you should take in light of these PPP reviews, attend the workshop “Greater relief for employers under the new PPP flexibility law”, on request at your convenience.
The workshop is moderated by Pamela Fagan, President of Audit Business Services Inc. and Certified Member of the Society for Human Resource Management (SHRM) and the American Payroll Association (APA).