Note: This guidance was sent as a client alert on Augusta 20, 2020 and the information is current as of that date.
The SBA has indicated that they would not be accepting applications until August 10th (at the earliest). Many banks are still not accepting PPP forgiveness applications. We are advising clients to not apply until the next stimulus bill is passed because based on the two current proposals, there may be changes to forgiveness that would be taxpayer favorable. The official due date for forgiveness is 10 months after the end of the covered period, so you should have plenty of time to apply. As an additional note, The PPP Flexibility Act extended the deferral period for payments on PPP loans (if applicable) until the date the lender receives the applicable forgiven amount from the SBA. So, while we hope this is resolved soon, you shouldn’t have to make payments until forgiveness is determined.
Payroll Tax Deferral
The Executive Order (EO) is effective on September 1 and requires the Department of Treasury to determine how employers should implement the requirement. The EO states that the Secretary of Treasury will issue guidance to implement the memorandum. We suggest all clients wait for that guidance prior to taking any action. If guidance is not provided prior to September 1, we advise all clients to continue withholding as normal and not defer the payroll taxes.
Expansion of Unemployment Benefits
The President also issued a memorandum regarding Unemployment Benefits. This spring, Congress passed the CARES Act, which created additional unemployment benefits in the amount of $600 per week. This benefit ran through July 31, 2020 and has since lapsed. The President has issued an order to extend unemployment benefits by $400 per week to eligible claimants from the week of unemployment ending August 1, 2020. Based on the limited follow-up guidance provided, this may only be a $300 per week benefit. Some administration officials have indicated that states would not be required to match, the individual receiving the benefits would just have to already be receiving $100 or more in state benefits. States will be working with the federal government in the coming weeks to determine how the plan will be implemented.
Student Loan Payment Deferral
The White House’s memorandum on student loan deferral moves to waive student loan interest until Dec. 31, extending the current relief under the CARES Act that is set to expire Sept. 30 by two months. Payments are scheduled to restart on Jan. 1, 2021. This deferral applies to loans “held by the Department of Education,” which doesn’t include privately held student loans.
Halting Evictions “Considered”
The EO calls for Health and Human Services Secretary Alex Azar and Centers for Disease Control and Prevention Director Robert Redfield to “consider” whether an eviction ban is needed. It does not provide any financial aid to help renters. The executive order calls only for Treasury Secretary Steven Mnuchin and Housing and Urban Development Secretary Ben Carson to see if they can find any more funds to provide assistance.
Both the House and the Senate are now in recess until September without passing a stimulus bill after weeks-long negotiations between the Trump administration and Congress broke down. The starting points for the negotiation are the HEROES Act, which was passed by the House of Representatives in May and a proposal by Senate Republicans that hasn’t been voted on in that chamber. The negotiations are ongoing, but progress is reportedly limited.