Both the U.S. Senate and Congress have passed a bill that would allow for sweeping reform to the Small Business Administration’s Paycheck Protection Program (PPP). The changes in this PPP revision are aimed at making lending terms better for restaurants, retailers and other businesses.
Small businesses around the country, including many in Lea County, have taken advantage of the program to help pay salaries for employees during the pandemic.
The Paycheck Protection Program Flexibility Act of 2020 is a bipartisan bill and extends the eight-week period under which loan recipients can spend the PPP money while also addressing other items from the original program causing issues and concerns for small businesses.
The PPP revisions would include:
- Extend the “covered period” under which small businesses can spend the loan proceeds from eight weeks to 24 weeks, or until Dec. 31.
- Remove the limits on loan forgiveness for small businesses that were unable to rehire employees, hire new employees
- Expand the 25 percent cap to use PPP funds on nonpayroll expenses, such as rent, mortgage interest and utilities, to 40 percent of the total loan. That lowers the 75 percent requirement for payroll expenses to 60 percent to get maximum forgiveness.
- Allow small businesses to take a PPP loan and also qualify for a separate, recently enacted tax credit to defer payroll taxes, currently prohibited to prevent “double dipping.”
- Give small businesses more time to rehire employees or to obtain forgiveness for the loan if social-distancing guidelines and health-related actions from the Centers for Disease Control and Prevention or other agencies prevented the business from operating at the same capacity as it had before March 1.
- Extend the period for when a business can apply for loan forgiveness, from within six months to within 10 months of the last day of the covered period,
These changes will make the program easier to use and more forgiving for businesses who have already taken part. If your small business has not applied for PPP, there are still funds available. Please consider speaking to your local banker at Lea County State Bank, First American Bank, Pioneer Bank, or Western Commerce. If you have questions about tax credit relief opportunities and other COVID-19 relief options, please speak to your local tax experts at CRI Carr, Riggs and Ingram, LLC or Johnson, Miller & Co.
The Economic Development Corporation of Lea County is dedicated to helping businesses succeed during these trying times and beyond and will continue to track changes to federal stimulus bills. For more information on funding options, please visit EDCLC.org/COVID19.
Chair, Economic Development Corporation of Lea County