Technical Changes to PPP Loan Program
Good evening – it was good see to everyone today at our annual meeting! As Linda mentioned, the House cleared legislation this afternoon right before our meeting was taking place to make some needed technical changes to the PPP loan program. Key provisions of the Paycheck Protection Program Flexibility Act (HR 7010) would:
- Extend the PPP loan forgiveness period to include costs incurred over 24 weeks after a loan is issued or through Dec. 31 (whichever comes first); businesses that received a loan before the measure is enacted could keep the current eight-week period.
- Extend to Dec. 31 from June 30 a period in which loans can be forgiven if businesses restore staffing or salary levels that were previously reduced. The provision would apply to worker and wage reductions made from Feb. 15 through 30 days after enactment of the CARES Act, which was signed into law on March 27.
- Maintain forgiveness amounts for companies that document their inability to rehire workers employed as of Feb. 15, and their inability to find similarly qualified workers by the end of the year. Under the modified bill, companies would be covered separately if they show that they couldn’t resume business levels from before Feb. 15 because they were following federal requirements for sanitization or social distancing.
- Extend the deadline to apply for a PPP loan to Dec. 31 from June 30.
- Require at least 60% of forgiven loan amounts to come from payroll expenses.
- Repeal a provision from the CARES Act that barred companies with forgiven PPP loans from deferring their payroll tax payments.
- Allow borrowers to defer principal and interest payments on PPP loans until the SBA compensates lenders for any forgiven amounts, instead of the current six-month deferral period. Borrowers that don’t apply for forgiveness would be given at least 10 months after the program expires to start making payments.
- Establish a minimum loan maturity period of five years following an application for loan forgiveness, instead of the current two-year deadline set by the SBA. That provision would apply to PPP loans issued after the measure is enacted, though borrowers and lenders could agree to extend current loans.
Here is ACEC’s support letter for HR 7010, which was circulated earlier this week. Note the provisions in the bill changed somewhat between yesterday when the letter was circulated and today’s vote. The letter also reiterates ACEC’s concerns over two outstanding issues – the need to reinstate the tax deductibility of expenses covered by PPP loans and DOD’s position with respect to credits from firms that have received forgiven PPP loans. Here is the multi-industry sign-on letter that ACEC drafted and circulated in opposition to the DOD policy, as well as separate comments ACEC filed with the Department.