WASHINGTON (BRAIN) — The Small Business Administration announced Monday modifications to the Paycheck Protection Program to make it easier to qualify for loan forgiveness as businesses attempt to recover from the hardship of the COVID-19 pandemic.
The PPP Flexibility Act extends the coverage period for forgiveness to 24 weeks — from eight — after disbursement. Borrowers already receiving PPP loans have the option to use the eight-week coverage period.
Other changes include:
- Lowering the requirements to 60% — from 75% — of a borrower's loan proceeds to be used for payroll during the 24-week loan forgiveness period. If using less than 60% of the loan amount for payroll, the borrower will continue to be eligible for partial forgiveness, subject to at least 60% of the loan forgiveness amount having been used for payroll.
- Providing leniency in loan forgiveness based on reductions in full-time employees for borrowers that are unable to return to the same level of business activity before Feb. 15, due to compliance with requirements or guidance issued between March 1 and Dec. 31, 2020, related to worker or customer safety requirements related to COVID-19. Leniency also will be extended to businesses unable to hire similarly qualified employees for unfilled positions by Dec. 31.
- Increasing to five years the maturity of PPP loans that are approved by SBA (based on the date SBA assigns a loan number) on or after June 5.
- Extending the deferral period for payments of principal, interest, and fees on PPP loans to the date that SBA remits the 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).
- In addition, the new rules will confirm that June 30 remains the last date a PPP loan application can be approved.
"Right now, retailers and small businesses in the bike industry are seeking stability to help plan for the future and support the growth of the recent bike boom," said PeopleForBikes COO Jenn Dice. "We're pleased to see the Paycheck Protection Program Flexibility Act signed into law. Increasing the loan coverage period to 24 weeks and removing red tape on how borrowers can use this program will allow them to better meet their unique needs and continue servicing their communities."
Since April 3, the SBA said it has provided more than 4.5 million loans totaling more than $500 billion to help businesses affected by the COVID-19 pandemic. Two rounds of federal funding have been approved, totaling $659 billion.
