On June 5, 2020, President Trump signed H.R. 7010 (the Bill), which the Senate had unanimously passed. The Bill amends several provisions of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and the Paycheck Protection Program (PPP). Key changes included in the Bill are outlined below.
PPP Loan Maturity and Deferral
PPP Loan Forgiveness
o 24 weeks from the date of the loan’s origination (previously 8 weeks from origination); or
o December 31, 2020 (previously June 30, 2020).
o The borrower was unable to rehire individuals employed on February 15, 2020; and,
o The borrower was unable to hire similarly qualified employees for unfilled positions on or before December 31, 2020; or
o The borrower was unable to return to the same level of business activity as before February 15, 2020, due to compliance with guidance issued by Secretary of Health and Human Services, the Director of Center for Disease Control and Prevention and the Occupational Safety and Health Administration, during the period from March 1, 2020 until December 31, 2020, related to the maintenance of standards for sanitation, social distancing or any other worker or customer safety requirements related to COVID-19.
The Bill permits borrowers to defer all 2020 Social Security tax burdens into 2021 and 2020, even if the borrower’s PPP loan is forgiven prior to December 31, 2020. The CARES Act had included an exception that a borrower would not be eligible for delayed payment of employer payroll taxes if such borrower’s PPP Loan is forgiven.
We expect that there will be further guidance from the Small Business Administration implementing the above changes. If you have any questions, please contact Tarter Krinsky and Drogin’s COVID-19 response team at CV19team@tarterkrinsky.com.
|Ben-Ami, Andrew R. Partner and Chair of Tax Practice||Partner and Chair of Tax Practice||212.216.8025|
|Chu, Justin Y.K. General Counsel and Partner||General Counsel and Partner||212.216.1160|
|Lydell, Sherri D. Partner||Partner||212.216.1151|
|Malinowski, Simon I. Associate||Associate||212.216.1133|
|Molinari, Guy Partner and Chair of Corporate and Securities Group||Partner and Chair of Corporate and Securities Group||212.216.1188|
|Rudolph, Elishama A. Associate||Associate||212.216.1145|
|Schoenstein, Richard C. Partner and Co-Chair of Securities and Financial Services Litigation Group||Partner and Co-Chair of Securities and Financial Services Litigation Group||212.216.1120|
|Smith, James G. Partner||Partner||212.216.8060|
|Toevs Carolan, Tara Partner||Partner||212.216.8007|