PPP Forgiveness Terms Substantially Relaxed

The terms of the usage of PPP loans were just substantially relaxed by the Paycheck Protection Program Flexibility Act of 2020 – H.R. 7010.  PPP recipients now have 24 weeks (the “covered period”), to use the loan proceeds instead of the original eight weeks and still receive forgiveness of the loan amounts.  However, recipients of already issued loans can elect to still use the original 8 week period for purposes of their forgiveness application calculations if that is more favorable.

The PPP Flexibility Act also provides significant relief involving the provisions that reduce loan forgiveness amounts where staffing levels have declined.  It adds additional time to cure cuts in staffing or compensation levels that reduce forgiveness amounts, extending the deadline from June 30 to December 31, 2020. It also adds a provision that allows two exceptions to the forgiveness penalties for staffing reduction.  Where the loan recipient can document that it was unable to rehire staff because their prior employees, and similarly qualified employees, were not available, the forgiveness reduction will not apply.  It also will not apply where the recipient is unable to return to the same level of business activity as before February 15, 2020 due to sanitation, social distancing or any other customer or worker safety requirements related to federal COVID-19 requirements or guidance.

It also eases the prior restriction developed through the regulatory process that 75% of PPP loan funds were required to be spent on payroll costs.  The new PPP Flexibility Act provision requires only 60% of funds be used on payroll costs, allowing 40% to be spent on other specifically allowed costs of mortgage interest, rent and utility payments.

Further, it substantially extends the original PPP loan payment deferral terms. Originally, no payments of principal, interest or fees were required for six months. Now, no payments are required at all until a forgiveness determination is made, so long as the forgiveness application is filed within 10 months of the end of the “covered period.” That works out to a total of more than 15 months from when the loan is originated without any payments – the 10 months begin to run after the end of the extended 24 week period for using the funds. If the forgiveness application is not filed by the 10 month deadline, payments on the loans begin.

Finally, the PPP Flexibility Act removes a restriction on those that receive PPP loan forgiveness from also taking advantage of a delayed payment of employer payroll taxes.  Now, PPP loan recipients who seek loan forgiveness will also be able to use the deferred payroll tax payment provisions of Section 2302 of the CARES Act.  Those provisions allow for payment of 50 percent of specifically defined applicable employment taxes for 2020 to be paid by December 31, 2021, and the remainder by December 31, 2022.

COVID-19 Employment Update Emails By Date

Sample Notice Throughout the COVID-19 crisis our employment department has kept clients informed.  Below are the emails by date with the newest at the top.  As we send each new update we will update this resource page so that people can review as needed.

Note: These posts are made available for general informational purposes only and none of the information provided should be considered to constitute legal advice.

08.27.2020 – Clarifying CDC Confusion on Testing and Exposure Guidelines

08.21.2020 – Wildfires, Smoke and Power Outages

07.24.2020 – COVID-19 Updates and Reminders

07.13.2020 – New Statewide COVID-19 Restrictions

07.09.2020 – Local Counties on State Watch List

06.19.2020 – Mandatory Face Coverings, SoCo Covid-19 Check App Update and Tips

06.08.2020 – Things Employers Should Keep in Mind with New Orders

06.01.2020 – Status on SoCo COVID-19 Check App

05.29.2020 – Clarification for Sonoma County Dine In Businesses

05.29.2020  – Sonoma County Drama with Practical Takeaways for All

05.27.2020 – COVID-19 Exposure Protocol

05.26.2020 – Checklists for Reopening in Napa and Marin Counties

05.26.2020 – Sonoma County’s Expanded Stage 2 – There’s an app for that

05.18.2020 – PPP Loan Forgiveness Guidance

05.12.2020 – The Map and Other Resources to Help Plan Your Reopening

05.07.2020 – Highlights of Napa County’s Updated Shelter in Place Order Including Cloth Face Covering Requirement for the Workplace

05.05.2020 -Issues for Onsite Employees During Mid-COVID

04.22.2020 – Napa and Marin County Updates to Shelter in Place Orders

04.08.2020 – Finally! Specific Guidance For Potential Workplace COVID Exposure

04.06.2020 – Napa Order, Employee Work Pass and DOL Regulation Updates

04.01.2020 – Stricter Shelter in Place Orders and Required Posting of Social Distancing Protocol

03.31.2020 – IRS FAQs on FFCRA and CARES

03.29.2020 – DOL Answers Key FFCRA Paid Leave Questions

03.27.2020 – Spanish DOL FFRCA Poster

03.27.2020 – Employer Focused CARES Summary

03.25.2020 – FFCRA DOL Poster and Guidance

03.25.2020 – DOL FAQ re Coverage

03.23.2020 – DOL’s Summary of Key FFCRA Components

03.21.2020 – Clarification of Essential Workers

03.19.2020 – Guidance on the Essential Critical Infrastructure

03.19.2020 – Governor Issues Stay at Home Order

03.19.2020 – Families First Coronavirus Response Act Summary

03.17.2020 – A Small Slice of Clarity

03.16.2020 – COVID 19

03.10.2020 – COVID 19 Sample Notice