Better Late Than Never? New Law Expands Loan Forgiveness Provisions of the Paycheck Protection Program and Provides Other Desperately Needed Relief

Client Alert
June 8, 2020

On Friday, June 5, 2020, bipartisan legislation aimed at addressing many of the issues and difficulties that have arisen with respect to the loan forgiveness provisions of the Paycheck Protection Program (PPP) became law. The Paycheck Protection Program Flexibility Act of 2020 amends several provisions of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and the PPP, originally enacted as part of the CARES Act, that have created uncertainty and were viewed as stumbling blocks for many potential PPP borrowers. The following are some of the most significant changes to the PPP as a result of the new law:

While these changes are certain to be helpful to many PPP loan participants, many significant questions are not addressed by the new law including, for example, the breadth of the “payroll costs” concept, issues relating to taxation and issues relating to business eligibility and affiliation. No doubt, the new law itself will also spawn new questions for which additional guidance will be needed.

Nevertheless, we expect that the new law will cause many smaller businesses that had previously refrained from applying for a PPP loan to now do so, which means that unallocated funds under the PPP (approximately $148 billion as of June 4, 2020) may be allocated quickly.

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Sullivan has developed a rapid response team of attorneys to help our clients and our communities cope with the impact of the COVID-19 pandemic and understand the implications of the CARES Act and other actions taken by state governments and the federal government. Please refer to Sullivan’s resource center at www.sullivanlaw.com/COVID19 for more information and for access to Sullivan’s library of related advisories.

Please know that Sullivan is focusing substantial efforts to provide assistance to businesses and individuals affected by COVID-19 and benefited by the CARES Act. If you have questions about how to move forward and navigate the novel legal issues raised by COVID-19 and/or the CARES Act, please contact your primary Sullivan attorney or send a message to CARES@sullivanlaw.com.

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