Law Extending Application Period Also Makes Forgiveness Simpler
On July 4, 2020, the federal government extended the application period for Paycheck Protection Plan loans to August 8, 2020, as $130 billion of the allocated funds remained available. The law also facilitates the forgiveness process for applicants.
Under the provisions of the initial act, a borrower could forgive qualified expenses for an eight-week period from the date of disbursement. Under the new law, the forgiveness period has been extended to the earlier of 24 weeks after disbursement or December 31, 2020.
Borrowers may still qualify for total forgiveness of the PPP loan but must demonstrate that at least 60% of the funds borrowed were used for qualified expenses (down from 75% in the initial bill). Qualified expenses include payroll costs, utilities, and mortgage or rent payments. If a borrower fails to meet that test,the loan must be paid back at an interest rate of 1%. All non-qualified loans disbursed before June 5, 2020, must be repaid within two years. Loans disbursed after June 5 carry a five-year repayment period.
To qualify for forgiveness, borrowers also must maintain or rehire employees and maintain their salary levels. The PPP.
forgiveness application requires that borrowers document
compliance with this requirement. An employer who makes a good faith effort, with a written offer, to rehire former employees will not be punished if the offer is rejected.
The Small Business Administration has exclusive authority to review all loans and make determinations of eligibility for forgiveness. Lenders cannot unilaterally forgive a PPP loan.
Contact MCIS Law for Assistance with Forgiveness of a PPP Loan
At MCIS Law, PLLC, in Stafford, we provide comprehensive counsel to startup and existing businesses in southeast Texas. For a confidential consultation with an experienced and knowledgeable lawyer, email us or (346) 297-0121 We are currently communicating with clients by phone, text message, or videoconference. We accept all major credit cards.