Congress extends the deadline for Payroll Protection Program loan applications

For the Monitor
Published: 7/4/2020 4:08:57 PM

The principal federal law providing financial and tax relief to business owners and others to help them deal with the coronavirus pandemic is the CARES Act, and, for most business owners, the principal benefit available to them and their employees under that act is the Payroll Protection Program (the PPP).

As discussed below, late last week President Trump signed an amendment to the PPP to make it available to business owners that have not yet received PPP loans.

First, however, for readers not already familiar with current features of PPP as originally enacted and as previously amended, they are as follows.

■ The PPP provides loans to owners of qualifying businesses of up to $10,000 per employee to help cover the salaries and wages paid to these employees, and, for PPP purposes, it treats sole proprietors as employees.

■ As originally enacted and as amended, the CARES Act has made $659 billion available for PPP loans, and almost 4 million businesses have received these loans.

■ The rules determining whether a business can qualify for a PPP loan are complex, but the most basic rules are these: The business must have fewer than 500 employees; the net worth of the business must not exceed $15 million; and with certain exceptions, the average net income of the business for the two years preceding its PPP application may not exceed $5 million.

■ Businesses must spend at least 60% of their PPP loans to cover employee paychecks, but they may spend up to 40% on mortgage interest, rent payments, and utility payments.

■ The maximum amount of any PPP loan will be the lesser of $10 million and 2.5 times the average total monthly payments for payroll costs during the year before the date of the application.

■ PPP loans may be made directly by the federal Small Business Administration (the SBA), but the SBA has also authorized private lenders – including, for example, most New

Hampshire banks – to make these loans.

■ In their PPP loan applications, business owners must certify that because of “the uncertainty of current economic conditions,” they need the loans. Thus, businesses that are doing well despite the pandemic can’t receive PPP loans.

■ Business owners who spend their entire PPP loan proceeds in accordance with PPP rules may treat these proceeds as tax-free grants and may apply to their PPP lenders for loan forgiveness.

■ Notwithstanding any IRC rule to the contrary, the forgiving of PPP loans will not trigger federal income tax.

Until now, the deadline for business owners who wanted to apply for PPP loans was June 30. However, through last week, $130 billion in PPP funds had not yet been loaned. But as of July 1, both the Senate and the House had voted to amend the PPP loan application deadline to Aug. 8, and late last week, President Trump signed that amendment into law.

It is likely that within the next few weeks, Congress will make yet additional billions of dollars available to small businesses to enable them to survive the pandemic. But any New Hampshire business owners who have not yet applied for loans under the PPP as currently in effect should do all they can to meet the new Aug. 8 deadline.

John Cunningham is a Concord tax and businesses lawyer and estate planner. He has published Drafting Limited Liability Company Operating Agreements and Maximizing Pass-Through Deductions under Internal Revenue Code Section 199A. Both are the leading books in their fields. If you have business or tax questions you’d like addressed in this column, call John at (603) 856-7172 or e-mail him at


Support Local Journalism

Subscribe to the Concord Monitor, recently named the best paper of its size in New England.

Concord Monitor Office

1 Monitor Drive
Concord,NH 03301


© 2021 Concord Monitor
Terms & Conditions - Privacy Policy