Resources

Client Alerts, News Articles, Blog Posts, & Multimedia

Everything you need to know about BMD and the industry.

Update: President Trump Signs Paycheck Protection Program Flexibility Act of 2020

Client Alert
June 4, 2020

Update: Today President Trump signed into law the Paycheck Protection Program Flexibility Act of 2020 ("FA"). The House passed the law on May 27 and the Senate approved on June 3. The legislation provides more flexibility to small businesses who received loans under the Paycheck Protection Program (“PPP”).

Maturity of PPP Loans

To start, the FA establishes that all PPP loans granted after the enactment of the FA will carry a 5-year minimum maturity term. For already existing loans, the FA allows for lenders and borrowers to mutually agree to modify the 2-year maturity term of the existing loan and implement the new 5-year minimum.

Extended Covered Period

Further, the FA extends the deadline to apply for a PPP loan to December 31, 2020. The covered period for which PPP loan recipients may spend the loan is also extended. Originally, small businesses had 8 weeks to spend the PPP loan money. Under the FA, small businesses may spend the PPP loan money during a 24-week period or until December 31, 2020, whichever occurs first. A business that has received a loan prior to the enactment of the FA may elect to spend their loan within the 8-week spending period that coincides with origination of their loan or extend it through the new 24-week covered period.

Payroll vs Nonpayroll Uses

Prior to the FA, recipients of a PPP loan were required to use 75% or more of the loan on payroll expenses in order to be eligible for loan forgiveness. The FA reduces that amount and requires recipients to spend at least 60% of the loan amount on payroll expenses in order to be eligible for loan forgiveness. This allows a recipient of a PPP loan to use up to 40% of the loan amount on non-payroll expenses like mortgage, rent, and utility payments.

Full-Time Equivalent Safe Harbor

The PPP requires loan recipients to restore its full-time employee count or employee wages to its February 15, 2020 level by June 30, 2020 in order to receive the full amount of loan forgiveness. Because many businesses are still facing difficulties in restoring operations to their February 15, 2020 levels, the FA extended the date to restore the loan recipient’s full-time employee count or employee wages to December 31, 2020.

Further, the FA provides a new exemption from a proportional reduction of loan forgiveness due to a reduction in full-time employees. This exemption is conditioned on the PPP loan recipient documenting, in good faith, one of the following two findings. First, a loan recipient can document an inability to rehire individuals who were employees on February 15, 2020 and document an inability to hire similarly qualified employees for unfilled positions by December 31, 2020. Second, a loan recipient can document:

“an inability to return to the same level of business activity as such business was operating at before February 15, 2020, due to compliance with requirements established or guidance issued by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration during the period beginning on March 1, 2020, and ending December 31, 2020, related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID–19.”

Extended Deferral Period

Under the initial CARES Act, a deferral period of not less than six months and no more than one year was allowed for loan payments of principal and interest. Under the FA, the deferral of payments of principle and interest extends until the lender receives the total forgiveness amount of the loan, which is determined by the CARES Act. Additionally, if a PPP loan recipient fails to apply for forgiveness of the loan, then the recipient must begin payments of interest and principle within 10 months of the end of the newly established 24-week covered period.

It is anticipated that President Trump will sign the FA into law but, until then, the CARES Act and the PPP remain in effect leaving the above-mentioned changes unimplemented.

For questions regarding the Paycheck Protection Program Flexibility Act of 2020, please contact your primary BMD attorney.

PPPPaycheck Protection Program Flexibility Act of 2020CARES Actloan forgivenessextended deferral periodsafe harborBMD SBA Loan Team
Client Alert

IRS Grants Additional Extensions and Suspends Collection Activity

April 13, 2020More Extensions Granted for Filing Returns In addition to those previously announced, the IRS has granted extensions for filing of the following returns and payments of amounts due for any of the returns listed below due after April 1, 2020 and before July 15, 2020: Form 706 - Estate and Generation-Skipping Transfer Tax; Form 8971 – Information Regarding Beneficiaries Acquiring Property form a Decedent; Form 709 – United States Gift (and Generation-Skipping Transfer) Tax; Any Estate Tax payment due as a result of an election under sections 6166, 6161, and 6163; Form 990-T – Exempt Organization Business Income Tax; Form 990-PF – Return of Private Foundation or Section 4947 Trust; Form 4720 – Return of Certain Excise Taxes; and All estimated payments made on Form 990-W; 1040-ES, 1041-ES, 1120-W. (This is a change from the extension of only the first quarter estimate to include the June 15, 2020, estimate).Client Alert

IRS Provides Guidance for Payroll Tax Deferrals and Credits

April 13, 2020IRS Provides Guidance for Payroll Tax Deferrals and CreditsClient Alert

FCC Funding Opportunity for Telehealth Equipment – Portal Open

April 13, 2020Telehealth is becoming a necessary practice for healthcare providers during the COVID-19 pandemic. However, not all providers have the means to institute a telehealth program. In order to help non-profit and public healthcare providers utilize telehealth, the Coronavirus Aid, Relief and Economic Security (CARES Act) set aside $200 million in funds for telehealth equipment, broadband connectivity, and information services. The FCC has recently released a guidance document that describes how eligible providers can apply for this “COVID-19 Telehealth Program” and the portal for applying will open today, April 13, 2020 at 12:00 PM ET.Client Alert

The CARES Act Provider Relief Fund: What We Know So Far…

April 10, 2020The CARES Act that was signed into law of March 27, 2020 provides for the Provider Relief Fund, which set aside $100 billion in relief funds for healthcare providers with expenses or lost revenue attributable to COVID-19. On April 9, 2020, the Department of Health and Human Services (“HHS”) released the first round of $30 billion of funding. All healthcare providers that received Medicare fee-for-service reimbursements in 2019 should have received a distribution. Payments will be made via electronic payment. Providers that do not receive electronic payment will receive paper checks over the next few weeks.Client Alert

CARES Act Offers Additional Funds to Healthcare Providers Offering Care, Diagnoses, or Testing Related to COVID-19

April 8, 2020In order to help prevent, prepare for, and respond to the COVID-19 pandemic, a $100 billion fund, run through the Public Health and Social Services Emergency Fund (PHSSEF), has been made available to cover non-reimbursable costs attributable to COVID-19 under the CARES Act. This fund has been designed to get money into the health care system as quickly as possible. As such, applications will be reviewed, and payments will be made, on a rolling basis. HHS has been given significant flexibility in determining how the funds are to be allocated, as opposed to operating under a mandated formula or process for awarding the funds. While the Secretary of HHS has not yet released guidance on the application process, this is expected in the near future. BMD will provide updates as soon as this information becomes available.
Older posts
Newer posts