Here Are Your Articles for Tuesday, June 16, 2020
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Updates from the Paycheck Protection Program Flexibility Act


Recently, Congress passed legislation to loosen some of the restrictions that came with the popular Payroll Protection Program, which was signed into law on June 5, 2020.

The new law contains several major changes that vastly improve the terms of the program:

  • Lowers the bar for PPP funds that must be used for payroll from 75% to 60% for those businesses that want forgiveness. In the original version of the new legislation, it seemed this 60% was a "cliff," meaning borrowers must spend at least 60% on payroll or none of the loan will be forgiven. However, in a joint statement issued Monday, June 8th by SBA Administrator Jovita Carranza and Treasury Secretary Steven Mnuchin, they clarified that partial loan forgiveness will still be available if borrowers in fact come in under the 60% threshold,


  • Extends the original forgiveness period from eight weeks after the date of loan disbursement to 24 weeks, but not past December 31, 2020, providing substantially greater flexibility for borrowers to qualify for loan forgiveness. Borrowers that have already received PPP loans retain the option to use an eight-week covered period, if preferred,


  • Provides a safe harbor from reductions in loan forgiveness based on reductions in full-time-equivalent (FTE) employees for borrowers that are unable to return to the same level of business activity the business was operating at before Feb. 15, 2020, due to compliance with requirements or guidance issued between March 1, 2020, and Dec. 31, 2020, by the secretary of Health and Human Services, the director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration related to worker or customer safety requirements related to COVID-19,


  • Provides a safe harbor from reductions in loan forgiveness based on reductions in FTE employees, to provide protections for borrowers that are both unable to rehire individuals who were employees of the borrower on Feb. 15, 2020, and unable to hire similarly qualified employees for unfilled positions by Dec. 31, 2020,


  • Increases to five years the maturity of PPP loans that are approved by the SBA on or after June 5, 2020. Borrowers with PPP loans funded before June 5, 2020, should consider contacting their lender to discuss a potential extension of maturity date for their PPP loan if forgivness is not received,


  • Extends the deferral period for borrower payments of principal, interest, and fees on PPP loans to the date that the SBA remits the borrower’s loan forgiveness amount to the lender (or, if the borrower does not apply for loan forgiveness, 10 months after the end of the borrower’s loan forgiveness covered period).


As further guidance is issued, we will be sure to pass along to you. In the meantime, please let us know if you have any questions regarding your specific situation.

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Coulter & Justus, P.C.
Coulter & Justus, PC
(865) 637-4161
9717 Cogdill Rd, Suite 201
Knoxville, TN 37932
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