The Trump administration signed into law the new rules and forgiveness guidelines relaxing the previous rules for small business owners who received a loan through the Paycheck Protection Program.
Many small business owners who borrowed a loan for the Paycheck Protection Program, a $610 billion fund established at the end of March, experienced that the guidelines on how to spend the money were too strict and could potentially leave them on the hook for the money.
The bipartisan law eased the rules on how small business owners need to spend the coronavirus aid money in order for it to be forgiven. Loan recipients are now only required to spend 60 percent of the aid on maintaining payroll, rather than the previous 75 percent rule. The money that can be spent on operating costs like rent and utilities increased to 40 percent from 25 percent.
The PPFA extended the timeline for businesses to spend the money from two months to 24 weeks. Another key aspect of the PPFA is that it gives businesses until Dec. 31 to rehire workers in order for their salaries to count toward forgiveness; previously, they had until June 30 — a problem for some in states where businesses were slower to open their economies. The employee salary eligible for forgiveness is still capped at $100,000.
The law also eased rehiring requirements for businesses. For instance, if a small business owner is unable to rehire an individual who was an employee on or before Feb. 15, or is able to prove they were unable to hire a similarly qualified candidate, their loan may still be eligible for forgiveness. If the loans are not forgiven, a business will have five years at 1 percent interest to repay the loan, rather than the initial two years.
In order to have their loan forgiven, small business owners must fill out an application, released in mid-May, and submit it to the bank or lender that approved their initial request.
Used from
FOXBusiness
