Congress has given small businesses more time to access PPP funding. The PPP loan’s previous application deadline was June 30, 2020. However, on Saturday, the President signed legislation into law authorizing the Small Business Administration (“SBA”) to resume accepting applications on July 6, 2020. The new deadline to apply for a PPP loan is August 8, 2020. The SBA has the most updated version of the application on their website.
The goal of PPP loans is to help small businesses maintain their businesses and pay their employees during the challenging financial conditions presented by the COVID-19 pandemic. While the original terms were more restrictive and loan applications and forgiveness applications were long and confusing, recent approved revisions have made the terms more flexible and the applications shorter and more user-friendly.
Despite the extension on applications, the terms of the loans remain the same. In order for PPP loans to be fully forgiven, borrowers must spend the loan funds at least 60% for payroll and other employee compensation-related costs, with the other 40% used on certain other approved costs like rent and utilities. Further, the funds must be used within twenty-four weeks of disbursement or by December 31, 2020, whichever is earlier, up from the original eight-week requirement. For any unforgiven amount, PPP loans have only one percent interest and business owners can defer payments for up to six months. Loans issued after June 5, 2020 have a maturity of five years, and loans issued prior to June 5, 2020 maintain the original two-year maturity date unless otherwise mutually agreed upon by the lender and borrower.