In a press release issued yesterday, the Treasury Department and Small Business Administration announced they will “promptly” be issuing new PPP rules and guidance, a modified borrower application form, and a modified loan forgiveness application to implement the new Paycheck Protection Program Flexibility Act. (H.R. 7010, P.L. 116-142) As part of this new guidance, the Treasury Department has stated that the 60% payroll cost threshold will not be a “cliff” test, but rather a cap. Specifically, the release stated that the modifications made by the PPPFA:
“Lower the requirements that 75 percent of a borrower’s loan proceeds must be used for payroll costs and that 75 percent of the loan forgiveness amount must have been spent on payroll costs during the 24-week loan forgiveness covered period to 60 percent for each of these requirements. If a borrower uses less than 60 percent 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 percent of the loan forgiveness amount having been used for payroll costs.”
The text of the press release is available at:
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