Small Businesses Get More Flexibility For Loan Forgiveness
SALT LAKE CITY – Utah businesses will now have greater flexibility and additional time to get their Paycheck Protection Program loans forgiven.
The bipartisan measure — officially called the Paycheck Protection Program Flexibility Act — was signed into law by President Donald Trump on Friday.
The modifications came after small business owners and lenders realized the original timeline and terms of the loans under the CARES Act were unrealistic.
“I think we started out with a fairly one-size-fits-all solution,” said Howard Headlee, president of the Utah Bankers Association. “And then when we got into it and saw the details, we realized there’s a number of different scenarios out there that need to be accommodated in order to help small businesses.”
Headlee said the relaxed rules make the program better, and give businesses more confidence that their loans will be completely forgiven.
“Our goal is to make sure that 100% of these PPP loans get forgiven,” he said.
Among the key changes are businesses will now get six months to spend their loan money instead of the two months under the original terms.
In addition, the new rules require that businesses spend 60% of the loan on payroll costs, that’s down from the original requirement of 75%.
Also, companies now have until the end of the year to rehire employees that were let go during the downturn.
Zions Bank Senior Economist Robert Spendlove said the changes eliminate unintended consequences and show that decision-makers are listening.
“It also shows that rather than trying to catch small businesses, or catch people and put them in a difficult position, Congress is working for them and really trying to help them,” Spendlove said.
Utah Republican Senator Mitt Romney released a statement saying he was pleased by the passage of the measure.
“This bill also allows greater flexibility for businesses to use these funds to cover other necessary costs beyond payroll,” Romney said. “This extension will be crucial for many of our small businesses who still remain closed or far from full capacity as we fight COVID-19.”
Utah Democratic Congressman Ben McAdams also released a statement saying that businesses need the additional time and flexibility to get their loans forgiven.
“Utah led the country in processing these loans so that small businesses could provide paychecks to hard-working employees during the COVID-19 shutdown,” McAdams said. “Many small businesses, through no fault of their own, may not be open or fully functional within 8 weeks — the original deadline to spend the funds for loan forgiveness.”
There is still money available in the Paycheck Protection Program. The deadline to apply for a new loan is June 30.
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