PPP Loan Application Deadline Extension | DMJ & Co., PLLC
Since it was enacted in April, the Paycheck Protection Program (PPP) has incentivized small business owners throughout the U.S. to keep their workers on the payroll during the COVID-19 pandemic. On July 4, President Trump signed legislation that extends the deadline for small businesses to apply for PPP loans.
The original deadline to apply for PPP funds was June 30. At midnight on that date, the U.S. Small Business Administration (SBA), which oversees the PPP program along with the Treasury Department, stopped accepting loan applications. Yet, $130 billion remained in the fund from the $660 billion originally allocated. Accordingly, the extension, which was approved unanimously by both houses of Congress on July 1, now gives businesses until August 8 to apply for an initial PPP loan funds.
Initially, PPP loans were designed to be forgiven only if a business spent 75% of the loan money on payroll. Along with the application deadline extension, the new legislation lowers that threshold to 60%. Additionally, businesses now have six months in which to spend the money instead of the previous two-month window. It also defers payroll taxes for loan recipients.
The PPP, created as part of the $2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act, is designed to help small business owners and other individuals adversely affected by the COVID-19 pandemic. It provides direct government subsidies for payroll, rent and other expenses. Subsidies are in the form of federal loans which can be forgiven if borrowers apply at least 60% of the funds for payroll and retain their employees on payroll for a defined number of weeks. Loans can range up to $10 million per loan and can also become grants. To date, more than 4.8 million small businesses have received loans totaling approximately $520 billion.
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