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The Sikh Coalition News
June 9, 2020
  • [UPDATE] New PPP Loan Rules

    June 9, 2020 (Washington, D.C.) -- On June 5, President Trump signed another bipartisan COVID-19 pandemic bill that makes significant changes for businesses and nonprofits to have Paycheck Protection Program (PPP) loans forgiven. The Paycheck Protection Program Flexibility Act (PPPFA) eases restrictions on how the money must be spent in order to be forgiven.

    The original PPP loan program was created in March under the CARES Act and allows small businesses and nonprofits (including gurdwaras) to obtain a low interest loan that will be forgiven if the funds are used for paying employee wages and other critical expenses.

    For businesses or nonprofits that have not yet applied for PPP, it is not too late to do so: the official deadline to apply for PPP is June 30, 2020. You can learn more about the application process by clicking here.

    PPP Loan Now Forgiven Easier

    In order for the PPP loan to be forgiven, certain conditions have to be satisfied. Businesses and nonprofits were originally required to use 75% of the loan on payroll in order to have the loan forgiven; now, they only need to use 60% of the funds towards payroll. This effectively allows recipients to increase spending of the PPP funds on other expenses. However, the PPPFA does not change the list of expenses eligible for forgiveness, which still includes rent, mortgage payments, utilities, and interest on loans.

    Businesses and nonprofits were originally required to spend PPP funds in an eight-week period. Meeting this obligation was hard for those that were shut down, but now, PPP fund recipients will have 24 weeks to spend their funds on payroll and authorized expenses. Businesses and nonprofits that are able to spend the PPP funds before the 24 week deadline can also request to have their loans forgiven early.

    Changes in Rehiring Requirements

    Additionally, the PPPFA changes requirements on when businesses and nonprofits have to pay employee wages. Employers were originally required to rehire workers by June 30, 2020, but now have until December 31, 2020 to do so. The PPPFA does not change how salaries are calculated towards forgiveness. Eligible salaries for forgiveness still cannot exceed $100,000 per employee, and they cannot be applied to employees living outside of the United States.

    PPP was created to ensure that businesses and nonprofits keep their employees on the payroll with strict requirements. Under the PPPFA, recipients can now receive loan forgiveness with less restrictions on how many employees are kept on payroll if the business can prove that it has been unable to rehire an individual, hire similarly qualified employees, or return to the same level of business activity prior to February 15, 2020.

    Loan Term Extended

    The PPPFA also eases repayment if the loan or portions thereof are not forgiven. A business or nonprofit will now have five years, instead of two, to repay the loan at 1% interest. The first repayment will also be deferred for six months after the Small Business Administration makes a determination on the loan’s forgiveness.

    The Sikh Coalition will continue to provide additional information and resources as the federal government enacts additional assistance that can help individuals, businesses, and gurdwaras impacted by COVID-19.

    As always, the Sikh Coalition urges you to practice your faith fearlessly.
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