The Latest Paycheck Protection Program Update for Your Business
The forgivable loan program is intended to provide accessible financing to small businesses affected by COVID-19. Below, we’ll review the latest changes that have been made to the program, so that you’re prepared to apply.
What Your Business Should Know About Recent PPP Changes:
1. Extended Usage Timeline and Improved Flexibility
In this latest update to the program, business owners can extend the length of time in which they can utilize the loan (now December 31st) and provides more flexibility on how they can spend it.
Most notably, it’s no longer required that employers spend at least 75 percent of their loan on payroll costs. Instead, the most recent bill now states that business owners must spend 60 percent on payroll costs, and the rest can be used for other approved usages. In addition, the expense ratio forgiveness is 75:25.
2. Extended Repayment Period for Future Borrowers
Thus far, 4.5 million small businesses have received a PPP loan, and reports claim that there’s still more than $100 billion available. With the latest update, future recipients can now extend their repayment period from two years to five years. However, business owners that have already received their PPP loan won’t receive an extension.
3. Eliminated Headcount Rule
Because the COVID-19 pandemic continues, business owners in many states are required to follow strict capacity rules. Due to this, PPP recipients no longer must maintain their pre-crisis head counts.
4. Revised Loan Forgiveness Schedule
Now, recipients have 10 months from the last day of the covered period to apply for loan forgiveness. In addition, the forgiveness period for expenses has been expanded to 24 weeks or until the end of the year (whichever occurs first). At this time, money that’s spent in eight weeks from the loan disbursement date is eligible for loan forgiveness.
For more information on PPP loan forgiveness, click here.
5. Ability to Defer Payroll Taxes
With the latest PPP update, employers can now defer a portion of their payroll taxes, which previously wasn’t allowed.
As business owners work to adapt to their new normal, it’s crucial to have additional financing at their fingertips. Remember, the PPP loan is distributed on a first come, first serve basis, and the deadline is approaching.
As always, we’ll provide any updates to the deadline, requirements, and stipulations as they’re made available. Good luck!
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