What’s In The PPP Expansion? A Quick Roundup Of What You Need To Know

After Congress passed an expansion of the Payroll Protection Program earlier this week, President Trump signed it on Friday.

So what’s in there? Here’s a quick rundown:

Extended Timeline.

There’s an extension of the covered period from 8 to 24 weeks. That means you have three times a long to continue using your PPP loan to backstop your payroll (up to $100,000 per employee) and still get the loan, or at least part of it, forgiven. “Of course, limits remain,” writes Forbes contributor Anthony Nitti, who has a great roundup of the program and the expansion. “The maximum amount paid to any one employee that will be forgiven is capped at an annualized salary of $100,000; as a result, for a 24-week covered period, this limit will be reached once an employee receives $46,153 in cash compensation.”

Extended Repayment.

New PPP borrowers can take up to five years, instead of two, to repay the loan. If you already borrowed from the program, you can talk to your lender about extending the loan term to five years—but they’ll have to agree. Which they probably will.

More for Non-Payroll Costs.

You now have the ability to spend more of the proceeds of your PPP loan on non-payroll costs (up to 40%), but as Nitti cautions, you must use at least 60% of the covered loan amount for payroll. “if a borrower fails to spend 60% of the loan proceeds on payroll costs, NONE of the loan will be forgivable.” Yikes.

Added Exceptions.

The expansion adds exceptions for borrowers looking for full forgiveness, even if you don’t restore your workforce. As the Journal of Accountancy explains, “Previous guidance already allowed borrowers to exclude from those calculations employees who turned down good faith offers to be rehired at the same hours and wages as before the pandemic. The new bill allows borrowers to adjust because they could not find qualified employees or were unable to restore business operations to Feb. 15, 2020, levels due to COVID-19 related operating restrictions.”

Covid Safety Exception.

What are those restrictions? Companies get a pass if they can’t resume their prior business activity due to “social distancing, sanitation requirements, or customer safety needs” as established by government agencies since the pandemic began. “Both of these exceptions leave room for interpretation, but they are a way for employers to meet the FTE requirements without having to actually hire back employees,” according to The National Law Review.

More Time to Restore Workers.

You can take the 24-week period to restore your workforce and wage levels to where they were before the crisis and still be eligible for full, or near-full, forgiveness of the loan. And now you have until Dec. 31 to do it, rather than June 30.

Delay Payroll Taxes.

You can also delay payment of up to 50% your payroll taxes for two years if you took a PPP loan, which, as the National Law Review reminds, was not prohibited under the CARES Act.