What is it with the PPP and weekends?  We recently espoused our theory that the Treasury Department so dislikes lawyers and accountants that it issued its 14th set of Interim Final Rules on the Friday of Memorial Day Weekend. Well DC did it again, enacting the PPP Flexibility Act this past Friday afternoon. So guess what we did this weekend, instead of attending the Springsteen Concert and the Mets’ game? Oh yeah. Never mind.

The PPP Flexibility Act

This new law amends the PPP to provide way more flexibility to employers (probably how they got the name) in the uses and forgiveness of the loan proceeds. Here are the most significant changes for employers:

  • Instead of having to use the funds in 8 weeks, you can choose to spread the money over 24 weeks from the date of funding;
  • The 24 weeks allows more time to return employees to work and increase the payroll to the February 15 levels and as a result, maximize forgiveness;
  • You are now allowed to spend only 60% on payroll rather than 75% and use the remaining 40% to pay interest on covered mortgages, rent and utilities;
  • If you cannot return to February 15th FTE levels, you will not be penalized in the forgiveness formula if you can document an inability to rehire or replace employees despite good faith efforts or because of limits imposed by government orders on workplace capacity;
  • If your PPP loan is forgiven, you will now be eligible for payroll tax deferrals previously prohibited under the PPP; and
  • The term for new PPP loans will be 5 years instead of the 2 that the rest of us are stuck with. This pandemic is so unfair!

Most of the good news here is for those businesses that are not yet permitted to open, that will not be able to open to full capacity, or that are struggling to get employees to return due to fear or the lure of easy money in the form of Unemployment benefits.

NYC Is Back-Kinda

The City that previously never slept will be waking up in Phase 1 this week. That applies to construction, retail limited to curbside or in-store pick up (meaning no browsing), manufacturing, wholesale trade and let’s not forget NYC’s thriving agriculture and forestry industries. Come on, isn’t that why they call it the Big Apple? All the rules apply: social distancing among workers and customers, employers must provide employees with gloves and masks, and 50% capacity in stores. What will be interesting to see is how mass transit will work. The NY Stock Exchange opened 2 weeks ago at 25% capacity on the floor and with a rule: no employees can commute using mass transit. Most employers will not be in a position to impose such a rule, but we’ll see what the MTA looks like in the next few weeks. The other issue that will impact the return work is the same as in NJ, which is what to do with those pesky kids. NYS never required daycare centers to close but most did anyway based, no doubt, on the reluctance of parents to send the kids and having enough employees there to wipe their little noses. Last week, Governor Cuomo said day camps can open June 29. The question remains whether parents/employees will be comfortable sending the kiddies so they can return to work. One thing we know: it will make it tougher for them to remain eligible for any government benefits if they choose to keep their kids home.

More than Just Down the Shore

Back in the real Garden State, we finally know that daycare centers will be reopening on June 15 and camps July 6. Keep in mind though that these are businesses that will be dependent on the pint-size customers showing up and having enough employees to chase them around. Without enough of either, their continued viability may be tough. 

Employers will face the same issues with employee reluctance to send their children. If employers can wait it out a bit longer, the PPP Flexibility Act takes some pressure off forcing the issue.

Most importantly, on June 22, Mark, Bill and Bob from Accounting will be first in line, 6 feet apart, to get their hair cut. 

One last thing: 

Dear Congress and Treasury Dept: 

Mark and Bill have no plans for July 4th weekend, so please amend the PPP again or at least issue some new regulations. Thank you.