In some good news for businesses struggling to meet the demands of the Paycheck Protection Program (PPP), President Donald Trump signed off on a piece of bi-partisan legislation today that eases rules in the CARES Act program.
The highlights of what rule change are:
- Extending the expense forgiveness period from eight weeks to twenty-four weeks (giving businesses longer to spend the funds)
- Reducing the 75% payroll ratio requirement. It is now 60%, allowing 40% of funds for other qualified needs to be covered such as mortgage or rent costs.
- Eliminating 2-year loan repayment restrictions for future borrowers
- Allowing payroll tax deferment for PPP recipients
- Extending the June 30 rehiring deadline to Dec. 31. This means employers can claim the payroll costs of an employee toward their grant without having to reemploy that employee until the Dec. 31 deadline.
For businesses receiving the PPP funds, meeting all requirements is essential to ensure the loan will be forgiven under federal law. If they cannot meet the forgiveness criteria, strained businesses could be facing an up hill battle to repay.