Q: Recent amendments to the Cares Act are certainly helpful to travel agencies that have Paycheck Protection Program (PPP) loans. We now have 24 weeks to spend the money (instead of just eight weeks) and still be eligible to have the loan forgiven. We now have to spend only 60% of the funds on payroll versus 75% before. Finally, the forgiveness-reduction formula has been changed so that we have until Dec. 31 to rehire all our staff instead of June 30. While rehiring everyone by June 30 would have been impossible, doing so by Dec. 31 looks very unlikely, given that the travel business is still so terrible. Are there any loopholes allowing us to have the loan forgiven even if our staffing level is still way down at the end of the year?
A: I wrote about one exception in my June 8 Legal Briefs column, "PPP loan forgiveness when workers don't return." You can still obtain forgiveness for the pay that you offered an employee who declined an offer to come back to work, as long as you keep records and report the employee's decision to the state unemployment agency.
Recently, the Small Business Administration (SBA) stated that it would also agree to other exceptions: You can obtain forgiveness for what you would have paid any employee who you fired for cause and any employee who requests a lower number of hours.
Now, the new Paycheck Protection Program Flexibility Act adds two more exceptions, and you may be able to take advantage of one of them. You will be able to avoid a forgiveness reduction if you can document either:
• An inability to rehire individuals who were employees of the eligible recipient on Feb. 15, and an inability to hire similarly qualified employees for unfilled positions on or before Dec. 31; or
• An inability to return to the same level of business activity as such business was operating at before Feb. 15, due to compliance with requirements established or guidance issued by the secretary of Health and Human Services, the director of the Centers for Disease Control and Prevention or the Occupational Safety and Health Administration during the period beginning on March 1 and ending Dec. 31 related to the maintenance of standards for sanitization, social distancing or any other worker or customer safety requirement related to Covid-19.
The SBA plans to offer guidance on what constitutes "inability to rehire," "inability to hire" and "inability to return ... due to compliance" and what documentation is going to be needed. I hope that your agency will be able to take advantage of one of these exceptions.
There are two more recent, interesting government actions concerning PPP. First, for owners and self-employed people who file Schedule C, the maximum forgivable amount of pay for yourself has been increased from $15,385 to $20,833.
Finally, the SBA affirmed that the final deadline for applying for a PPP loan is still June 30, so if you haven't applied, you need to do so by then.