Paycheck Protection Update for 6/9/2020
The U.S. Small Business Administration (SBA) and Treasury department announced on Monday that PPP borrowers are able to qualify for partial loan forgiveness if less than 60% of the PPP loan is used for payroll.
In a joint statement released yesterday, U.S. Treasury Secretary Steven Mnuchin and Small Business Administration (SBA) Administrator Jovita Carranza stated that “this bill will provide businesses with more time and flexibility to keep their employees on the payroll and ensure their continued operations as we safely reopen our country,”
On June 5th the minimum was lowered through legislation from 75% to 60% for PPP borrowers required to spend on payroll costs to qualify for the loan forgiveness. But while the original PPP rules allowed for partial loan forgiveness under the 75% basement, the new bill passed by Congress had language that could be interpreted as saying that if the borrower did not spend at least 60% of the PPP funds on payroll costs, none of the loan would be forgiven.
It is now clarified that partial loan forgiveness will also be available under the 60% threshold. Specifically, if a borrower uses less than 60% of the loan amount for payroll costs during the forgiveness covered period, the borrower will continue to be eligible for partial loan forgiveness, subject to at least 60% of the loan forgiveness amount having been used for payroll costs.
We will continue to provide you with updates as information becomes available.
Resource: The Journal of Accountancy, June 8, 2020