The federal government’s PPP loan was designed to allow contractors, self-employed individuals, and small businesses under 501 employees to get emergency funding to keep people on payroll. If they spend the loan on qualified expenses it can be forgiven. You can still apply for a PPP loan through Kabbage here until 6/30.
- Reduce the amount of the loan needed to be used on payroll from 75% to 60%. This addresses a complaint from businesses that they needed to be able to pay for rent, utilities, and mortgage payments in addition to paying salaries.
- Increase the time frame to use the funds from 8 weeks to 24 weeks, but the period won’t extend past 12/31/20.
- Extend the time frame to rehire employees from June 30 to December 31 to pre-pandemic levels and still qualify for loan forgiveness. This benefits those businesses that are still closed. There are also exceptions added if you are unable to rehire employees or can’t return to previous business levels.
- Extend the repayment period for new borrowers from 2 years to 5 years at 1% interest if your loan isn’t forgiven.
- In the bad news department, it appears that if you don’t use 60% of your loan for payroll, then none of your loan will be forgiven. Previously with the 75% threshold there would have been partial forgiveness.
It’s unclear what exactly the new cap will be for how much of an employee’s or owner’s salary that can be covered, will it be 8/52 or 24/52 out of $100,000?
I’d expect more clarification and FAQ from the SBA in the coming weeks.