The League of American Orchestras Provides Update on Paycheck Protection Program Flexibility and Guidelines
The League of American Orchestras has provided an update on flexibility and guidelines for the Paycheck Protection Program.
On Wednesday, the Senate agreed to a House-passed package of changes to the Paycheck Protection Program (PPP), sending H.R. 7010 The Paycheck Protection Flexibility Act of 2020 to the president's desk for approval.
While Congress continues to work on additional forms of COVID-19 federal relief, lawmakers agreed to the following near-term changes to the Paycheck Protection Program:
Extends the forgivable loan expenditure period from the current 8 weeks to 24 weeks after the loan origination date.
Extends the end date of the covered loan expenditure period from June 30, 2020, to December 31, 2020.
Removes the requirement imposed by the Small Business Administration (SBA) that 75% of expenses be associated with payroll expenses for full loan forgiveness, and instead requires that borrowers expend at least 60% of the covered loan amount on payroll costs, in order for the loan to be eligible for forgiveness.
Exempts borrowers from the proportional reduction of loan forgiveness related to retained full-time-equivalent positions in cases in which the borrower is unable to return to the same level of business activity due to compliance with federal requirements or guidance related to COVID-19.
Allows Paycheck Protection Program loan recipients to be eligible for the deferral of certain payroll taxes under Section 2302 of the CARES Act.
Extends the loan maturity period for paying back unforgiven portions of the loan from 2 years to 5 years.
Even as both the House and Senate approved the package, substantial questions remain over how the provisions are meant to be interpreted, including how borrowers might elect to apply an expenditure period of 8 or 24 weeks, and whether the new 60% payroll expenditure threshold would be an absolute minimum threshold for any loan forgiveness eligibility.