Government Extends Small Business PPP Relief
Jun 5th, 2020 @ 1:25 PM by Amber Nelson
As businesses around the country continue to navigate the coronavirus crisis fallout, President Trump signed into law Friday new regulation that modifies the current Paycheck Protection Program.
In order to better meet the needs of small businesses, the new legislation will allow PPP borrowers to reduce the share of their aid used on payroll to 60% from 75%.The remaining share can be used for expenses like rent, mortgage interest or utilities.
The new rules also extend the time that recipients can use the money from two months to six months. This provision was added to account for the many different situations during the past two months. Some businesses were completed shuttered, while other were able to stay at least partially open.
Under the updated PPP rules, businesses now have more time to rehire employees, extending the June 30 deadline. Companies that receive loan forgiveness will be eligible to defer their payroll taxes as well.
And for those who do not qualify for loan forgiveness, the repayment period has been extended.
President Trump lauded the changes, saying the legislation “will especially help restaurants, hotels and other businesses that have been very hard hit by the virus.”
Many business groups support the updated law. Small Business & Entrepreneurship Council President & CEO Karen Kerrigan said in a Fox Business article that the legislation makes the PPP “more effective and relevant for many small businesses.”
She would like to see additional modifications, however. “Small businesses would also like to see an expansion of the essential expenses that are forgivable under PPP,” Kerrigan said in a statement. “We are working to add technology costs – such as cloud services – to the list of forgivable expenses, as these tools are as vital as utilities and internet to small businesses.”
The original PPP supplied $350 billion for business loans. That amount ran out almost immediately and another $310 billion was appropriated, with $60 billion being directed to small lenders.
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.