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5 Week PPP Extension passed by House and Senate

Ed McLeod

July 2, 2020

The U.S. House of Representatives unanimously passed a five-week extension of the Paycheck Protection Program (“PPP”) on Wednesday, July 1. The House action follows the Senate’s approval of a five-week extension on Tuesday night.  The bill will now be sent to President Trump who is expected to sign it into law.

The application period for the PPP loan program was set to expire on June 30, 2020.  The bill extends the application period until August 8, 2020. The extension provides more time for small businesses to apply for the remaining $129 billion of authorized PPP funding.

Some of the key provisions contained in the new guidance include:

  • Allows a borrower to apply for loan forgiveness before the end of the “covered period” during which it must spend its PPP loan funds in order to qualify for forgiveness. The early loan forgiveness application can be submitted if the borrower has spent all the PPP loan proceeds before the end of its applicable covered period. Special rules regarding salary and wage restoration requirements will apply to borrowers filing an early application.
  • Employer health insurance contributions for S Corporation owners are not allowed in payroll costs. However, retirement contributions for these individuals are allowed.
  • The steps to calculate the forgivable amount of compensation of owner-employees and self-employed individuals is provided for both the 8 and 24-week covered periods.
  • It is the responsibility of the borrower to provide an accurate calculation of the loan forgiveness amount. Lenders are expected to perform a good-faith review of the forgiveness calculation but are not required to independently verify a borrower’s information if the borrower submits the required documentation supporting its forgiveness application.

 The bill is not yet law but is expected to be signed into law by the President.

We will continue to monitor the legislation as it makes its way through Congress and provide updates as the final bill is signed into law. If you would like more information on the Paycheck Protection Loan or the loan forgiveness programs, please contact us.

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