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The unending confusion surrounding the Paycheck ProtectionProgram continues.

The Paycheck Protection Program Flexibility Actthat passed the Senate Friday and was signed into law by PresidentDonald Trump the same day is intended to provide businesses withmore time and flexibility to keep their employees on thepayroll.

While SBA, in consultation with Treasury, will promptlyissue rules and guidance, a modified borrowerapplication form, and a modified loanforgiveness application implementing thenew legislativeamendments to the PPP, Veena Murthy, aprincipal at Crowe LLP in Washington, says immediate guidance isneeded in one area.

In a Monday comment shared with BenefitsPRO's sister publicationThinkAdvisor, Murthy, who joined Crowe in January from the JointCommittee on Taxation, where she was legislation counsel andadvised the House Ways and Means and Senate Finance committees ontax policy including the 2017 tax reform and the Secure Act,explained that the changes to the PPP as part of this new law"allow existing borrowers to keep the 8-week period for their loan,rather than the law's change to a 24-week period."

However, she continued, "it doesn't clarify that existingborrowers can keep the June 30 end date for therehire safe harbor, rather than the law's change to Dec. 31. Thereare many borrowers who want to keep the 8-week period and it'scritical for them to keep the June 30 rehire date."

Treasury and SBA, Murthy said, "need to put forth guidance onthis IMMEDIATELY so that these borrowers can make adecision. If the point of the law was 'flexibility' thenkeeping the 8-week period should mean the borrower can also keepother aspects related to that period on which they've been makingdecisions all along."

SBA and Treasury laid out how the modifications enactedFriday will implement the following changes:

• Ease the requirements that 75% of aborrower's loan proceeds must be used for payroll costsand that 75% of theloan forgiveness amount must have beenspent on payroll costs during the 24-week loanforgiveness covered period to 60% for each ofthese requirements. If a borrower uses less than 60% ofthe loan amount for payroll costs duringthe forgiveness coveredperiod, the borrower will continue to beeligible for partial loan forgiveness, subjectto at least 60% of the loan forgivenessamount having been used for payroll costs.
• Provide a safe harbor from reductions in loanforgiveness based on reductions in full-time equivalentemployees for borrowers that are unable toreturn to the same levelof business activity the business was operatingat before Feb. 15, due to compliancewith health and safety requirements or guidance issuedbetween March 1 and Dec. 31 by federal agencies.
• Provide a safe harbor from reductions in loanforgiveness based on reductions infull-time equivalent employees, toprovide protections for borrowers thatare both unable to rehire individuals who wereemployees of the borrower on Feb. 15, and unable to hiresimilarly qualified employees for unfilled positions by Dec. 31,2020.
• Increase to five years the maturity of PPPloans that areapproved by SBA (based on thedate SBA assigns a loan number) on orafter June 5.
• Extend the deferral period forborrower payments of principal, interest andfees on PPPloans to the date that SBA remitsthe borrower's loan forgiveness amount to thelender (or, if the borrower does not apply forloan forgiveness, 10 months after theend ofthe borrower's loan forgiveness coveredperiod).
• In addition, the new rules will confirm thatJune 30 remains the last date on which a PPP loan application canbe approved.

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