COVID-19 Update 5/29/2020

Member Roundtable Zoom Calls

Two member roundtable discussions are scheduled for next week via Zoom.  Join in the conversation!

• Mechanical members – attend the Mech XChange on June 3rd, from 11:30 a.m. – 12:30 p.m.
• Collision members – attend the BS Session on June 4th, from 11:30 a.m. – 12:30 p.m.

Paycheck Protection Program Updates

Interim Final Rule

On May 22, the Small Business Administration issued its interim final rule on loan forgiveness, which expanded on and clarified some items in the loan forgiveness application released on May 15. 

Notably, the interim final rule includes bonuses and hazard pay as forgivable cash compensation. The rule further clarified that payments to furloughed employees are included in payroll costs, which allows borrowers to pay employees even if the employees are not able to perform their day-to-day duties due to lack of economic demand or public health considerations.  Best to check with your lender or accountant for how these rules apply to your specific business.

PPP Reform Bills

On May 28, the U.S. House of Representatives voted 417-1 to pass H.R. 6886, legislation that will make the terms of use for PPP loans more flexible.  The legislation accomplishes the following:

• Extends the forgiveness period to 24 weeks
• Replaces the 75/25 rule with a 60/40 rule
• All new PPP loans will receive a 5-yr maturity. Existing loans will remain at a 2-year maturity.
• Allows businesses that receive forgiveness to also receive payroll tax deferment
• Ensures small businesses won’t be penalized by high unemployment benefits
• Creates a safe harbor for businesses that are required to open at only 50 percent capacity.

The U.S. Senate has introduced a separate PPP reform bill, S. 3833, that would give businesses up to 16 weeks to use the loans instead of eight weeks, among other changes.

The Senate has indicated it will likely vote next week on S. 3833. Following that, a compromise bill will have to be negotiated between the House and Senate before a final vote.

Note: This content and analysis is for informational purposes only and should not be construed as legal advice. Please consult your legal and financial advisors for detailed information before taking any action.