While the deadline for applying for a Paycheck Protection Program loan was June 30, both the Senate and House have passed a five-week extension for those that have not yet applied. President Trump is expected to sign it today.
With $129 billion remaining in PPP funding, the extension is intended to provide small businesses more time to apply for the loans. If signed by the president, the new expiration date is August 8, 2020. As new outbreaks are occurring and many states are slowing their reopening plans, businesses that didn’t originally apply will now have more time to reconsider, and evaluate, their funding options.
Designed to help small businesses and other qualifying organizations facing difficulties from the coronavirus pandemic and closure orders, these loans are intended to help cover the costs of salaries, mortgages, rent and utilities. The loans can be fully or partially forgiven based on how the business spends the funds.
Additionally, new guidance was issued last week to try to clear up some confusion on maturity dates and loan amounts. The biggest points are:
PPP loans received after June 5, 2020 have a five-year maturity period. If your PPP loan was received prior to June 5, 2020, it has a two-year maturity unless both the borrower and lender agree to extend the term to five years. We suggest if you received one of the earlier loans and want to extend the payback period, you contact your lender to discuss implementing and extension.
The maximum loan amount for newer self-employed individuals whose businesses were in operation on February 15, 2020, but not during the time period of February 15, 2019 to June 30, 2019, would qualify for an amount generally equal to 2 ½ times the business’ average monthly payroll costs incurred in January and February of 2020.
This can be quite confusing, so if you have any questions at all, let us know. We are happy to help in any way we can.