Congress Passes Bill Extending PPP Application Deadline To August 8
The U.S. House of Representatives and Senate have passed legislation extending the Paycheck Protection Program (PPP) for five weeks beyond its original June 30 expiration date, giving small businesses more time to take advantage of the $129 billion still in its coffers. The bill now goes to the White House, where President Trump is expected to sign it.
The PPP provides forgivable loans of up to $10 million to small businesses during the COVID-19 pandemic to help them meet payroll and day-to-day operating expenses. It was introduced in March as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The program is overseen by the U.S. Small Business Administration (SBA) and the Treasury Department. The SBA stopped accepting loan applications at midnight Tuesday but the legislation approved by Congress this week extends the application period for PPP loans through August 8.
The program has not been without questions and concerns from both borrowers and lenders, and it was modified with the June 5 passage of the Paycheck Protection Program Flexibility Act, which provided a greater opportunity for businesses to use, and seek forgiveness of, their PPP loan proceeds. One of the most significant modifications the Flexibility Act made is the extension of the covered period for loan forgiveness from eight weeks after the date of loan disbursement to 24 weeks after the date of loan disbursement, providing substantially greater flexibility for borrowers to qualify for loan forgiveness. Borrowers who have already received PPP loans retained the option to use an eight-week covered period.
“The PPP program was very valuable, but we were disappointed that the rules changed when we had almost used all of it under the original rules structure,” says Mary Jo Tomasini, MAS+, CEO of distributor CE Competitive Edge in Stevensville, Michigan. “We brought everyone back like the program required, even if we didn’t have work for them to do. Now that we have used the money up, we are struggling with the fact that the business has not returned like everyone hoped, leaving us with difficult decisions ahead. If we knew from the beginning that we could use the money over 24 weeks versus eight, we would have done things differently.”
Distributor Image Source in Kirkland, Washington, also took advantage of the PPP program. President Tom Goos, MAS, says, “The extension helped us by giving us a longer runway to be able to use the funding. If the extension did not occur, we would not have been able to utilize all of the forgiveness based on the payroll and expense limitations. The revised forgiveness worksheet was released a week and a half ago, but you had to decide if you wanted the eight-week or 24-week timeframe, and as I understand it you had to choose one or the other.”
Speaking on a U.S. Chamber of Commerce webinar yesterday, Manny Cosme, CPA, president and CEO of CFO Services Group, advised business owners, “If you haven’t applied yet, be sure that you are No. 1 on that list. We’ve helped hundreds of businesses at this point get the PPP loan and I know it does take some time to get that money, so be sure you apply right away.”