Alerts & Updates 
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Posts on this page reflect tax law change alerts & updates for new provisions passed by Congress that may impact you. We also periodically post reminders & updates that may impact our clients. While we try to be as detailed as possible, we ask that clients contact their BenderCPA advisor with any questions before taking action based on a post to ensure your intended outcome is achieved.
Paycheck Protection Program Update
As promised, we have kept a close watch on new legislation that
affects the Paycheck Protection Program (PPP) and have an important update for
you.
The Paycheck Protection Flexibility Act of 2020 or HR7010 (https://www.congress.gov/bill/116th-congress/house-bill/7010/text) was signed into law by the President
last week and offers adjustments to PPP loans—particularly regarding forgiveness
calculations. Key changes are as follows:
·
Covered time period
extended—The period
of time to use loan money has been extended from 8 to 24 weeks. This means that
you have more time to apply funds to qualified expenses that maximize loan forgiveness.
·
Payroll tax payments deferred—Originally under the Cares Act,
employers who received the PPP Loan could not also defer employer social
security payroll tax payments. HR7010 adjusted this to
allow any employer with social security payroll tax payments due between
March 27, 2020 and December 31, 2020 to pay half of the amount due by the end
of 2021 and the remainder by the end of 2022.
·
Payroll threshold adjusted—Originally, the Department of
Treasury and the SBA determined that 75 percent of a PPP loan had to be used
for payroll in order for the loan to be forgiven. The
75 percent threshold has been adjusted to 60 percent with the new law. Full loan forgiveness will only be granted if
at least 60 percent of funds are used for payroll costs.
·
Safe harbor date extended—The original Cares Act included safe
harbor exceptions to restore or attempt to restore employee positions and any
pay reductions by June 30, 2020. These exceptions
still exist, but the date to restore has been adjusted to December 31, 2020.
·
Loan payment deferral and loan term extended—The original 6-month deferral for
repayment of PPP loans has been extended to 10 months. Payments
are only required on the amount of the loan that is not forgiven. In addition, PPP loans can now have up to a
five-year term under HR7010. It’s unclear at this point how banks will accommodate these
changes into existing promissory notes.
As such, any businesses who do not expect to have complete forgiveness
should work with their banks to amend loan documents as needed.
We hope this update helps. Again, we
will continue to closely monitor new legislation and inform you on the key
changes that may affect your PPP loan.