Last night the US Senate, passed the US House version of PPP legislation to address several items. Know as the Paycheck Protection Flexibility Act, this legislation makes two major changes to give business owners more flexibility to use the loans.
- 8 week spending requirement has been extended to 26 weeks.
- Lowered the requirement of spending 75% of PPP loan proceeds for payroll to 60%. The remaining amount can be spent for utilities, rent as outlined before.
I expect the President to sign this legislation, since the US House and US Senate passed this legislation with only one negative vote.
How does this impact you? The biggest is the extension of time to spend your loan proceeds in order to qualify for loan forgiveness. You basically have 6 months to spend vs 2 months. I know in my own situation, my PPP loan will be spent 100% for payroll by the end of that 26 week period.
Several of us attended a webinar regarding the loan forgiveness. We will schedule a Zoom meeting later to discuss. The forgiveness paperwork will be more extensive requiring detail summaries for EACH employee. Thank goodness for Excel Worksheets. You can download the form and instructions from the SBA. We will be here to help you with any concerns you might have as you complete this form.
I would also say that after June 30, 2020, you should contact your banker to inquire how they want the documentation for review Every banking institution will have different requirements. So it is best to know in advance what is needed.
I believe this is still a very fluid situation with rules and regulations being provided regularly. Be aware and stay safe.
Senior Tax and Wealth Advisor