On June 24, 2020, LAMMICO hosted a webinar conducted by Jerry L. “Jay” Stovall Jr. and Eric B. Landry of Breazeale, Sachse & Wilson, LLP regarding the application of the Paycheck Protection Program Flexibility Act of 2020 (PPPFA). Mr. Landry is well-versed in the application of the PPPFA and has counseled clients daily since the beginning of the PPP loan process.
The webinar focused on the practical application of the PPPFA as well as the various changes that were made to the Act since its passage. The webinar was tailored to healthcare employers who have already obtained Paycheck Protection Program (PPP) loans and addressed managing the process of using the loans in a way that results in the maximum forgiveness possible. The following are highlights from the webinar:
- The forgiveness period was extended from eight to 24 weeks, though a borrower may elect to retain the original eight-week period as discussed in the webinar.
- The percentage of a loan that must be spent on payroll costs in order to achieve maximum loan forgiveness was altered.
- The minimum payroll requirement was lowered from 75% to 60%.
- The amount of the loan that may be spent on non-payroll costs was increased from 25% to 40%.
- Makes more loan proceeds available for rent, utilities, mortgage interest, etc.
The Treasury Department and SBA provided interpretation of these new percentages.
- The creation of a safe harbor for full-time equivalent (FTE) reductions when returning to February 2020 levels is not possible due to federal guidance. This revision has its own deadlines.
- Application of Guidance from the OSHA and CDC to employers’ already-existing obligations to report and record certain work-related illnesses and injuries.
- Employers’ obligations to investigate employees’ COVID-19 infections and to report the same in certain circumstances.
- Important dates and time periods as discussed in the webinar:
- Impact of restoration of FTE’s to original levels by December 31, 2020.
- Loan forgiveness application process:
- Loan forgiveness safe harbor deadline revised from June 30, 2020, to December 31, 2020.
- Other changes in loan forgiveness application documents and process are likely.
- The increase of the maturity of PPP loans approved by the SBA from two to five years for those loans received after June 3, 2020 (existing loans were not amended).
Update since the webinar: A borrower may submit a Loan Forgiveness Application before the end of the 8-week or 24-week covered period, provided that the borrower has used all of the loan proceeds for which the borrower is requesting forgiveness and the borrower’s loan forgiveness application accounts for any salary reductions in excess of 25% for the full covered period. The PPP Forgiveness Platform will go live and begin accepting Lender submissions on August 10, 2020, subject to extension if any new legislative amendments to the forgiveness process necessitate changes to the system.
PPPFA allows businesses receiving PPP loans to defer payroll taxes from March 2020 to December 31, 2020, and provides for periodic payments through 2022. To view the recorded webinar, log in as a Member at lammico.com.
Note: The information provided in this article was current at the time of publication. However, if you have any questions due to the rapidly changing nature of laws, regulations and guidelines, contact LAMMICO’s Risk Management and Patient Safety Department at 504.841.5211.