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Government Affairs
Congress Widens PPP Loan
By: Max Brandow, RASM Government Affairs Director
In June, Congress gave the Paycheck Protection Program (PPP) more flexibility for borrowers in how they can use the loan.
These new relaxed guidelines also change some eligibility requirements for the loan.
ELIGIBILITY REQUIREMENTS Borrowers now have 24 weeks, rather than eight weeks, to disperse their loan funds after receiving them in order to qualify for forgiveness. The mandatory amount of the loan to be spent on maintaining payroll costs has decreased from 75 percent to 60 percent. The remaining 40 percent must be used for eligible expenses, such as utility payments, rent or mortgage interest, or other payroll costs. The borrower must maintain the same number of full time–equivalent employees during the 24-week period of the loan as before the pandemic.
NEW FORMS AND DEADLINES
Although the Small Business Administration (SBA) and Treasury Department released forgiveness applications last month, new forms and guidance must now be issued. As of this writing, there is not a hard and fast timeline for these updates, but NAR expects this to be dealt with expeditiously at the federal level.
It is still true that PPP loan recipients must reduce the amount of their loan qualifying for forgiveness by any proportionate percent drop in employee numbers, but they now have an extended deadline of December 31st to rehire or fill those positions.
Loans for independent contractors and the selfemployed will be automatically forgiven in an amount equal to a 24-week portion of their 2019 net earnings, capped at $15,385, and based on their 2019 Form 1040 Schedule C, Line 31.
However, those borrowers must not use any portion of the remaining loan for payroll costs. The borrowers must certify the 40 percent portion of the loan that was not required to go to payroll, goes to an eligible use, and verify with documentation verifying both payroll and non-payroll costs as well as the average number of full-time equivalent (FTE) employees before and during the coverage period of 24 months. •
1 | Source: National Association of REALTORS® (NAR), www.nar. realtor.
