Most SBA PPP borrowers are moving from using the funds to cover payroll and non-payroll costs into the Forgiveness process. Guidance has recently been published, but additional legislation has been approved on June 5th amending criteria to allow more time and flexibility to borrowers to maximize forgiveness amounts and maintain employees and operations.
On June 5th, President Trump approved some amendments that will allow borrowers to use funds for up to 40% of non-payroll expenses from the previous 25% cap. In addition, the time period for the Covered Period is also being extended from 8-weeks (2-months) to 24-weeks (6-months). This will allow the borrower to maximize the use of funds and increase the probability that all the funds will be forgiven. Other changes include the loan term increasing from 24 months to 60 months for loans that were guaranteed by the SBA on or after June 5th. Lastly, the Safe Harbor deadline of June 30th, 2020 will be moved back to December 31st, 2020, allowing more time for the borrower to qualify for Safe Harbor by bringing back employees and/or restoring wages to pre-crisis levels. A deadline of June 30th was also established as the last day to apply for the SBA PPP loan.
