Congress has passed the following changes related to the forgiveness of loans under the Paycheck Protection Program which the President is expected to sign:
The 8-week covered period is changed to the earlier of the end of a 24-week period or December 31, 2020. For loans received previously, the 8-week covered period may still be elected.
The percentage of the funds that can be used for expenses other than payroll costs has increased from 25% to 40%, thereby reducing the percentage that must be used for payroll costs from 75% to 60%.
However, now to get any forgiveness, at least 60% must be used for payroll costs.
There is now a minimum maturity of 5 years for the remaining balance of a loan after forgiveness.
Payments are deferred until after loans are reduced for the forgiveness.
If no forgiveness is applied for, initial payments on the loan are deferred until the 10th month following the end of the covered period.
The date that employees must be rehired to avoid a reduction in the number of full-time equivalent employees has been changed from June 30, 2020 to December 31, 2020.
The number of full-time equivalent employees will not be reduced if the business is unable to rehire former employees, or similarly qualified employees, or is unable to return to the same level of business activity due to compliance with federal requirements or guidance related to COVID-19.
The business is now eligible for the deferral of the payment of the employer's share of Social Security taxes of 6.2% even if forgiveness is received.
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Your professionals at Castellano Korenberg & Co. are always available to assist you through this tough time of trying to make sense of all the new regulations being passed. Stay up to date with the most recent information by visiting castellanokorenberg.com, call us at 516-937-9500, or contact your CK professional for more information.