PPP Loan Deadline Extended – What Now?

Small businesses have 5 more weeks to apply for the program.

If you have not yet applied for the Paycheck Protection Program (PPP), you just got a little more time. President Trump signed the Paycheck Protection Program Extension Act on the July Fourth holiday, extending the deadline for small businesses to apply for aid related to the economic fallout from the coronavirus pandemic.

Businesses now have until August 8, 2020, to submit their PPP application.

The PPP provides direct government subsidies, in the form of federal loans, to eligible businesses for payroll, rent and other costs. The loans can be forgiven if businesses use at least 60% of the funds for payroll and meet other loan forgiveness requirements.

With $130 billion (out of $660 billion allocated) remaining in the PPP fund hours ahead of the previous application deadline, Congress voted unanimously to extend the deadline to give more small businesses an opportunity to participate in the program that was created under the CARES Act.

Who benefits from extension?

The PPP extension is good news for any small business owner who has not yet applied for the loan. It may be especially helpful for self-employed individuals, who had a shorter timeframe to apply when the loan program opened. It is also good news for business owners who may have missed out on the first round of funding as a result of lack of access to close banking relationships or those who needed more time to gather necessary documentation.

Some small businesses may have been reluctant to apply given concern about eligibility and forgiveness requirements. However, the Treasury, SBA, IRS and other governmental agencies have been trying to set more business owners at ease about applying for the PPP by providing loan program clarifications, including specific eligibility requirements. In addition, the Paycheck Protection Flexibility Act eased loan forgiveness restrictions in an attempt to alleviate concerns.

The Paycheck Protection Flexibility Act extended the covered period during which a loan recipient may use such funds for certain expenses while remaining eligible for forgiveness. Under the current rules, a small business owner can use 60% of their PPP funds on payroll and 40% on eligible non-payroll expenses — and they need to do so within a qualified 24-week period (no later than December 31, 2020).

Calculating loan forgiveness

If you have already applied and received your loan approval, the next step to prepare for is applying for PPP loan forgiveness.

The calculations for the PPP loan forgiveness can be quite complex. Business owners should contact their accountant for assistance with calculating the loan forgiveness and completing the required documentation. Learn more by watching a recording of our recent webinar, “PPP Loans: Calculating & Maximizing Loan Forgiveness.”

Close to 5 million U.S. small businesses have already received more than $520 billion in loans through the Paycheck Protection Program. The latest extension opens the door for many more to benefit. Contact your Kaufman Rossin professional for assistance with the PPP loan for your business.