PPP Reform Summary for Borrowers

PPP Reform Summary for Borrowers

ICBA released a summary of the Paycheck Protection Program reform law signed by President Donald Trump on Friday for community banks to share with their small-business borrowers.

While further guidance and clarification from the SBA and Treasury is likely, the Paycheck Protection Program Flexibility Act of 2020:

  • Extends from eight to 24 weeks the amount of time borrowers have to spend PPP funds while remaining eligible for forgiveness.
  • Lowers the amount that must be spent on payroll costs from 75 percent to 60 percent, though there is no forgiveness if payroll is less than 60 percent.
  • Extends to Dec. 31 the period in which employers may rehire or eliminate a reduction in employment, salary, or wages that would otherwise reduce the forgivable loan amount.
  • Replaces the six-month deferral of payments due under PPP loans with deferral until the date on which the amount of loan forgiveness is remitted to the lender.
  • Establishes a minimum maturity of five years for new PPP loans as opposed to the current two-year maturity date.
  • Eliminates a provision that makes PPP loan recipients who have such indebtedness forgiven ineligible to defer payroll tax payments.
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