On June 5, the Paycheck Protection Program Flexibility Act was signed into law, extending the time period during which employers have to use the funds and have their loan forgiven. When the PPP was originally designed in March, the expectation was that businesses and organizations would be back to full operation by the end of June. Clearly that is not the case! The goal is for all PPP loans to be forgiven, and therefore, more flexibility has been added to the Program:
- The 8-week period for utilizing funds is extended to 24 weeks.
- More of the loan (40%) may be spent on non-payroll expenses such as utilities and rent.
- The requirement for maintaining a Full-Time Equivalent employee count includes more exemptions, including if an employer hasn’t been able to return to full operation. Very few epidemiologists expect that we’ll be singing in our sanctuaries anytime before 2021.
- An employer who received a loan before June 5 may either apply with the original rules and forgiveness application or may wait until the 24-week period ends, which would be mid-September at the earliest, and apply using the revised SBA application, which has not yet been released.
So, if you have clearly spent all of your loan in 8 weeks, then you can use our v5 spreadsheet to calculate data and apply for forgiveness now. Note that this would only be the case if you have increased payroll significantly since 2019. The required documentation to accompany your application is included on slides 23-26 of the SBA guidance. Note that if you use the 24-week period, you will likely be able to document sufficient payroll to use 100% of your loan, and therefore only need to provide payroll documentation. This would likely be much simpler than collecting numerous bills, cancelled checks, and bank statements to document non-payroll costs. Our post regarding how to print necessary reports from QuickBooks will be linked here once it is complete.
Church Law & Tax offers a more complete analysis of the June 5 Act and its implications. Once the SBA has issued their updated PPP Loan Forgiveness application, we will update our spreadsheet to v6.
If you did not apply for a PPP loan, there is still a significant amount of funding available. The last date to apply is June 30, but many banks have an earlier deadline in order to allow time for processing.