New Jersey small business owners will have more flexibility — and clarity — to qualify for the Paycheck Protection Program that was created by the Coronavirus Aid, Relief and Economic Securities Act thanks to the recently enacted PPP Flexibility Act.
“When the President signed the bipartisan legislation into law, it gave more time and discretion for when and how the loans can be spent to keep employees on payroll and keep up with accounts payable to further assist the nation’s economy’s recovery from COVID-19,” Steve Bulger, regional administrator, U.S. Small Business Administration, said.
Al Titone, the district director for the New Jersey Small Business Association, said the SBA’s PPP has paid out $510 billion in potential forgivable loans to nearly 4.5 million small business owners. About 5,460 lenders are currently participating in the program, a 200% increase, Titone said. In addition, 135,203 New Jersey small businesses have benefited from $16.8 billion in PPP approvals.
“Small businesses and their advocates at all levels of government have spoken consistently about the PPP; it works and it’s a success,” Bulger said. “As we continue to combat coronavirus, our small businesses needed more give when it comes to when, where and how to apply. The Flexibility Act puts the decision-making power in the hands of the business owners who know best how to keep their businesses afloat while serving their employees and their customers.”
The SBA said it will issue these rules for the PPP:
- Extend the loan forgiveness period from eight to 24 weeks (borrowers who have already received PPP loans can use the eight-week covered period);
- Lower the requirements for borrowers to use 75% of loan proceeds and forgiveness amount to be used for payroll costs to 60% (If a borrower uses less than 60 percent for payroll, the borrower remains eligible for partial loan forgiveness);
- Provide loan forgiveness based on reductions in employees for borrowers who are unable to return to the same level of business when they were operating before Feb. 15, 2020 due to compliance with COVID-19 requirements;
- Provide loan forgiveness based on reductions in FTE for borrowers unable to rehire employees or hire similarly qualified employees for unfilled positions by Dec. 31, 2020;
- Increase to five years the maturity of PPP loans approved by SBA on or after June 5, 2020;
- Extend the deferral period for payments of principal, interest and fees on PPP loans to the date that SBA remits the borrower’s loan forgiveness amount to the lender.
The new rules also confirm that June 30, 2020 is the last day a PPP loan application can be approved. More than $130 billion in PPP funding is still available as of June 4.