Small Businesses: The Paycheck Protection Program Relaxes Requirements
With large parts of the economy affected by state-wide shutdowns for COVID-19, many small businesses needed help to stay afloat and to keep their employees on payroll. In response, the Small Business Administration has been offering forgivable loans to small businesses through the Paycheck Protection Program Flexibility Act of 2020. The loans were designed to be forgivable as long as the business used the loan to pay for payroll, rent, mortgage interest, and/or utilities.
The Paycheck Protection Program expands program’s flexibility
The U.S. Senate passed the House version of Paycheck Protection Program (PPP) legislation on Wednesday, June 3 in a unanimous vote. On June 5, 2020, the president signed the bill into law. The amendment relaxes some of the program’s requirements in the following ways:
The timeframe that businesses have to spend borrowed money was extended from eight weeks to 24 weeks. Businesses can choose to take the extended timeframe to pay their loan back or stick to the original eight-week window.
The repayment window for any non-forgiven portion of the loans was extended from two years to five years.
The amendment reduces the mandatory payroll spend of borrowed money from 75% to 60%. Borrowers should know that it is now an all or nothing situation, meaning that they must spend at least 60% on payroll or none of the loan will be forgiven.
Borrowers can now use the 24-week period to restore their workforce levels and wages to the pre-pandemic levels required for full forgiveness. The new deadline is Dec. 31, 2020; a change from the previous deadline of June 30, 2020.
The amendment allows for forgiveness of loans even in some situations where the business is unable to restore its full workforce. This means that borrowers may now be able to have their loan forgiven if they could not find qualified employees or were unable to restore business operations to Feb. 15, 2020, levels because of COVID-19 related operating restrictions.
The bill will allow businesses that took a PPP loan to also delay payment of their payroll taxes, which was not allowed under the CARES Act.
As of April 17, 2020, Hawaii small businesses have been the recipients of more than $2 billion in PPP loans. There are still over $100 billion in available funds through the PPP program, so businesses who haven’t yet are encouraged to apply. The final date to apply is June 30, 2020. Click here for the Small Business Administration Paycheck Protection Program site.
How partnering with a PEO can help reduce issues with Coronavirus in the workplace
A PEO provides small businesses with many advantages that they might not otherwise be able to afford. These advantages have become even more important during an international health crisis.
When small business owners’ partner with Makai HR they:
Gain peace of mind that they are complying with all of Hawaii’s labor laws, which is especially important when decisions are being made about how to handle a health crisis.
Can provide comprehensive health care plans that will give your employees peace of mind about going to the doctor for treatment and testing.
We are also here to support your business when you decide to work remotely:
Our cloud-based platform means that your employees can manage their HR needs through a computer, tablet or phone, making it easier for them to work from home.
Our cloud based HRIS platform means that your HR team can manage HR remotely if they are sick or everyone is working remotely.
Pro tip: this is a good time to encourage all employees to update to Direct Deposit to reduce in person bank transactions and continue timely payroll payments. Do not delay. Contact us today to get started!