Taxpayers seeking relief through the Paycheck Protection Program (PPP) fear the COVID-19 pandemic may not dissipate by December 31, the end of the program’s covered period, one practitioner said.
Despite a recent lengthening of program timelines, Raul A. Escatel of Ascendant Law Group LLP said that after state reopenings and a subsequent rise in coronavirus diagnoses, PPP recipients have become concerned about the covered term end date and other elements of the program.
Several policy elements are based on the notion of a supposed recovery that may not arrive by the end of the year, Escatel said on a June 24 webinar hosted by the American Bar Association.
“What if this doesn’t get better anytime soon, and what if the climate is, at the end of December, that [businesses] can’t hire people or that there’s just no business?” said Escatel, adding that that is one of the more common questions he’s heard from clients recently.
As many states take steps toward reopening and an economic recovery, coronavirus diagnoses have crept up, possibly thwarting what President Trump has referred to as a “V-shaped” economic rebound.
Escatel said that concerns have arisen regarding the 24-week covered period of the loan program, which is an alternate timeline for the loan’s covered term.
The Paycheck Protection Program Flexibility Act of 2020 (H.R. 7010), signed by Trump on June 5, lengthened the period in which incurred expenses can be covered under the PPP forgivable loan to either 24 weeks after the origination of the loan or December 31, 2020, whichever comes earlier.
Previously, the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P. L. 116-136) limited the PPP covered period to eight weeks of expenses.
To receive PPP loan forgiveness, a recipient must use at least 60 percent of the covered loan amount for payroll costs, and can use up to 40 percent for any payment of interest on a covered mortgage or for rent or utility obligations.