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.