On Thursday May 28, 2020, the House passed H.R. 7010 which would provide more flexibility to borrowers under the Paycheck Protection Loan Program. On Wednesday June 3, 2020, the bill also passed in the Senate and is now making its way to President Trump’s desk for signature.
In particular, the bill, among other things would amend the Paycheck Protection Loan Program as follows:
- Reduce the 75% payroll cost requirement to 60%. This would permit borrowers to spend the remaining 40% of loan proceeds on non-payroll costs such as interest on mortgage obligations, rent and utility payments.
- Allow borrowers 24 weeks to spend loan proceeds (or the earlier of December 31, 2020), as opposed to the current 8-week limitation.
- Extend the safe harbor restoration deadline (for FTE/wage reductions) from June 30, 2020 to December 31, 2020.
- Provide a new FTE reduction safe harbor if during the period of February 15, 2020, to December 31, 2020, the borrower is able to document in good faith (A) an inability to rehire individuals who were employees of the borrower on February 15, 2020, and an inability to hire similarly qualified employees for unfilled positions by December 31, 2020, or (B) an inability to return to the same level of business activity the borrower was operating before February 15, 2020, due to compliance with federal guidance or requirements issued between March 1, 2020, and December 31, 2020, relating to standards of sanitation, social distancing, or other worker or customer safety requirements due to COVID-19.
- Allow borrowers to defer payroll tax payments for the remainder of 2020 even if the borrower obtains loan forgiveness.
- Permit borrowers to repay any unforgiven loan balance in 5 years instead of 2 years.
Please contact a Kerr Russell attorney today for more information on H.R. 7010 and the Paycheck Protection Loan Program.
John D. Gatti is a Certified Public Accountant as well as an attorney. He concentrates his practice in the areas of taxation, mergers and acquisitions, business law, real estate law, and estate planning. John also serves as the firm’s administrative partner and chairs the firm’s Taxation Practice Group. He has considerable experience representing professional services firms. These include accounting, engineering, and architectural firms, as well as insurance agencies, in purchase and sale transactions.
Kevin T. Block focuses primarily on business law, including business transactions, real estate and secured financing. He handles matters related to real estate, finance, lease and purchase and sale transactions, mergers, acquisitions and dispositions, entity formation, commercial contracts and lien rights enforcement. He additionally represents commercial lenders, as well as borrowers in credit transactions. Kevin also specializes in business entity formation, drafting and negotiating business contracts, and business planning.
Cody Attisha focuses on taxation law, corporate law, mergers and acquisitions, finance, and estate and trust planning. He also helps clients with entity formation, including evaluating, choosing, and implementing the right partnership, corporate, or non-profit structure.
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