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Dan Bennett, PresidentJul 6, 20204 min read

PPP Extended Until August 8th

PPP extended until August 8th

President Trump on Saturday signed legislation that extends the deadline for businesses to apply for aid under the Paycheck Protection Program (PPP). The bill extends the deadline for businesses to apply for PPP loans until Aug. 8. The program, set up to assist businesses impacted by closures related to the coronavirus pandemic, had expired on Tuesday night with roughly $130 billion left unused. 

The Senate in a surprise passed the legislation by unanimous consent late Tuesday, extending the program hours before it was set to expire. The House took up the Senate bill and passed it by unanimous consent Wednesday afternoon, sending it to Trump’s desk.

https://thehill.com/homenews/administration/505545-trump-signs-ppp-extension

NADA released A Dealer Guide to Reopening Your Dealership During a Pandemic. 

The new resource brings together recommendations from government agencies, dealer associations and other third parties concerning practices that dealers may wish to consider as they reopen their physical locations in times of COVID-19.  The publication focuses on suggested guidance that seeks to mitigate the potential for spreading COVID-19, including dealership-wide and department-specific protocols for cleaning and disinfection, health screening, and social distancing.  It describes a potential task force charged with developing a detailed return-to-work plan and enforcing all protocols, discusses training employees, and provides numerous examples of helpful signage. The Driven Guide is available here.

From NHADA Partner Albin Randall & Bennett:

Last week, Treasury/SBA issued the revised PPP Loan Forgiveness Application incorporating changes as a result the Paycheck Protection Program Flexibility Act (PPPFA).  As you recall from previous emails, the PPPFA provided several new forgiveness criteria, which are incorporated into the application:

  • Payroll costs must be at least 60% of the amount forgiven with nonpayroll costs no more than 40% of the amount forgiven.  (Replaces 75/25 rule from Treasury/SBA)
  • Date (the Rehire Date) for rehiring employees to apply the FTE Safe Harbor and Wage Reduction Safe Harbor moved from June 30, 2020, to December 31,2020.
  • Forgiveness covered period (Covered Period) expanded to 24 weeks with an 8 week option if a loan was funded prior to June 5, 2020.
  • 2 new FTE Reduction Exemptions/Safe Harbors introduced if the borrower is unable to rehire an individual who was an employee on or before February 15, 2020 AND:
    • Unable to hire similarly qualified employees on or before December 31, 2020 OR
    • Unable to return to the same level of business activity that the business was operating at prior to February 15, 2020.

The application, along with the latest Interim Final Rule (IFR) issued Monday night, offer several new provisions, some favorable, others limiting:

  • The Rehire Date now is the earlier of the application date or December 31, 2020.  This is a favorable provision allowing businesses to apply for forgiveness earlier than the end of the year, if they have resumed operations and hired back employees after the end of the Covered Period.
  • The application and instructions indicated 24 weeks (or 8 week option) were the only two periods that could be used for forgiveness.  The IFR indicates forgiveness can be applied for prior to the end of the Covered Period, as long as any wage reduction calculations are done for the entire Covered Period.  In other words, if funds are spent by week 11, a business can apply for forgiveness right away, but if they have wage reductions for any employees, the reduction must be calculated over the entire 24 weeks.
  • The Application/IFR introduce a new twist on the FTE Safe Harbor.  If the business is unable to operate between February 15, 2020, and the end of the Covered Period at the same level of business activity as before February 15, 2020, due to compliance with requirements established or guidance issued between March 1, 2020, and December 31, 2020, by HHS, the CDC, or OSHA, related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID-19, the reduction in loan forgiveness as a result of a reduction in FTEs doesn’t apply.
    • This is a favorable provision that should apply to all businesses impacted by COVID, whether they were considered essential or nonessential.
    • The new IFR includes local directives as well, so closures or social distancing requirements issued by states also qualify.
  • There is a new EZ application for businesses that don’t have reductions in FTEs or wages. These businesses can use the new EZ loan forgiveness application; however, they still need to do the payroll/nonpayroll calculations and provide support for those numbers when applying for forgiveness.
  • Owner’s compensation is limited to 2019 compensation as follows:
    • If the 24 week Covered Period is used, 2.5 months equivalent of the 2019 compensation (maximum of $20,833)
    • If the 8 week Covered Period is used, 8 week equivalent of the 2019 compensation (maximum of $15,385)
    • All business owners are included in the limits above, including those shareholders of C Corporations and S Corporations.
  • The following owner’s benefits are considered compensation and should not be separately included in the employees’ health insurance or retirement benefits line items on the forgiveness application:
    • Self-employed, general partners or S Corporation shareholders’ health insurance
    • Self-employed and general partners retirement plan contributions

We will continue working on programming the new workbook to provide you with a tool to calculate loan forgiveness based on these new provisions.

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