Monday, June 9th, three days after the PPP Flexibility Act was signed into law, the Small Business Administration (SBA) and Treasury have issued a joint statement clarifying the 60% payroll threshold.
The new bill passed by Congress has language that could be interpreted as “…if the borrower did not spend at least 60% of the PPP funds on payroll costs, none of the loan would be forgiven…”
The clarification states that “if a borrower uses less than 60% of the loan amount for payroll costs during the forgiveness covered period, the borrower will continue to be eligible for partial loan forgiveness, subject to at least 60% of the loan forgiveness amount having been used for payroll costs.” So, the original thought of 60% payroll costs or NO forgiveness, has been modified.
Seeing another change so quickly after passing the legislation, further solidifies our suggestion of waiting until the SBA releases the new forgiveness application and Q&A clarifications.
