President Signs Paycheck Protection Program Extension Act; New Deadline Is August 8

(Parker Tax Publishing July 2020)

On July 4, President Trump signed legislation extending the deadline to apply for a loan under the Paycheck Protection Program (PPP). The legislation reauthorizes lending under the PPP through August 8, 2020. As of the end of June, the program still had an estimated $130 billion in funding available. Pub. L. 116-147.

Practice Aid: For an UPDATED CLIENT LETTER on the Paycheck Protection Program informing clients of the new deadline and explaining the details of the program Click Here

Background

The Paycheck Protection Program (PPP) is a loan program enacted as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (Pub. L. 116-136). Congress enacted the program to provide a direct incentive for small businesses to keep their workers on the payroll during the COVID-19 pandemic.

Under the PPP, the Small Business Administration (SBA) will forgive PPP loans if all employee retention criteria are met, and the funds are used for eligible expenses. The CARES Act provided a June 30, 2020, deadline to apply for a PPP loan.

Extension of Deadline to Apply for PPP Funds

Under the CARES Act, businesses were eligible to start applying for the loans on April 3, 2020. Because the loan program ran out of money in less than two weeks, an additional $310 billion was pumped into the PPP in the Paycheck Protection Program and Health Care Enhancement Act (Pub. L. 116-142). As of the end of June, the program still had an estimated $130 billion in funding available. As a result, in Pub. L. 116-147, Congress extended, and President Trump signed into law, a provision extending the deadline to apply for a PPP loan from June 30 to August 8, 2020.

Compliance Tip: In order to receive a PPP loan, an authorized representative of the borrower must complete SBA Form 2483, Paycheck Protection Program Borrower Application Form, and submit it to the borrower's SBA participating lender.

For an in-depth report on the CARES Act, see the March 30, 2020, issue of Parker's Federal Tax Bulletin (PFTB 2020-03-30). For an in-depth report on the PPP, see the April 7, 2020, issue (PFTB 2020-04-07). For a discussion of the changes made by the PPP Flexibility Act, see the June 5, 2020, issue (PFTB 2020-06-05).

Disclaimer: This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer. The information contained herein is general in nature and based on authorities that are subject to change. Parker Tax Publishing guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. Parker Tax Publishing assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein.

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