New as of June 3, 2020:
The US Senate has cleared HR 7010 on June 3 without change, which sends the bill to the White House for the President’s signature. This is the legislation we reported on previously (see the summary below) which extends the loan forgiveness period from 8 weeks to 24 weeks and includes other reforms.
From May 28, 2020:
As we discussed, the House cleared legislation on May 28 to make some needed technical changes to the PPP loan program. Key provisions of the Paycheck Protection Program Flexibility Act (HR 7010) would:
- Extend the PPP loan forgiveness period to include costs incurred over 24 weeks after a loan is issued or through Dec. 31 (whichever comes first); businesses that received a loan before the measure is enacted could keep the current eight-week period.
- Extend to Dec. 31 from June 30 a period in which loans can be forgiven if businesses restore staffing or salary levels that were previously reduced. The provision would apply to worker and wage reductions made from Feb. 15 through 30 days after enactment of the CARES Act, which was signed into law on March 27.
- Maintain forgiveness amounts for companies that document their inability to rehire workers employed as of Feb. 15, and their inability to find similarly qualified workers by the end of the year. Under the modified bill, companies would be covered separately if they show that they couldn’t resume business levels from before Feb. 15 because they were following federal requirements for sanitization or social distancing.
- Extend the deadline to apply for a PPP loan to Dec. 31 from June 30.
- Require at least 60% of forgiven loan amounts to come from payroll expenses.
- Repeal a provision from the CARES Act that barred companies with forgiven PPP loans from deferring their payroll tax payments.
- Allow borrowers to defer principal and interest payments on PPP loans until the SBA compensates lenders for any forgiven amounts, instead of the current six-month deferral period. Borrowers that don’t apply for forgiveness would be given at least 10 months after the program expires to start making payments.
- Establish a minimum loan maturity period of five years following an application for loan forgiveness, instead of the current two-year deadline set by the SBA. That provision would apply to PPP loans issued after the measure is enacted, though borrowers and lenders could agree to extend current loans.
See ACEC’s support letter for HR 7010. Note the provisions in the bill changed somewhat between May 27 and May 28 when the letter was circulated and the May 28 House vote. The letter also reiterates ACEC’s concerns over two outstanding issues – the need to reinstate the tax deductibility of expenses covered by PPP loans and DOD’s position with respect to credits from firms that have received forgiven PPP loans. See also the multi-industry sign-on letter that ACEC drafted and circulated in opposition to the DOD policy, as well as separate comments ACEC filed with the Department.
To the ACEC Community,
The Paycheck Protection Program (PPP) has been huge for the engineering industry.
In our most recent member survey on May 8, 88% of respondents reported applying for the program, and 94% of those had been approved (and another 4% were awaiting approval). Just under two-thirds (64) of these firms planned to use all of their loan funding, while 22% intended to use some of it and return the rest. Only 2% planned to return all of their loan.
To the federal government’s credit, the PPP funds were disbursed rapidly by an agency that wasn’t equipped to deal with the enormous volume of applications, but at the same time, guidance and information on the rules and regulations of the program have been much slower. ACEC’s advocacy team has been urging the Department of Treasury and the Small Business Administration (SBA) to provide more clarity to key issues that will define the program’s long-term success.
Here’s the latest.
To the question of whether PPP borrowers can make a good faith certification on economic need in qualifying for a loan, guidance released last week indicates that borrowers with loan amounts of less than $2 million will be deemed to have made this certification. The guidance also notes that borrowers with loan amounts greater than $2 million still have a basis for making the certification – click here for the latest FAQ document.
Treasury and SBA also released the Paycheck Protection Program (PPP) Loan Forgiveness Application and detailed instructions for the application. Click here to view the application and instructions.
As soon as we learn more information on loan forgiveness, we will circulate it to our members in our e-mail communications, through our podcasts and our ongoing series of Rescue Recover Rebuild webinars and online events. Follow the course schedule in the Webinar section of the ACEC Coronavirus Resource Center.
Another critical issue for our industry is securing financial assistance for state and local governments, which Congressional leadership has suggested will come in June. State DOTs, transit agencies, and other client sectors have been hit hard by decreased tax collections and other revenues. AASHTO has requested nearly $50 billion, the American Public Transportation Association has asked for an additional $24 billion, and organizations representing water clients, airports, and other client agencies are submitting requests. We are working closely with these organizations to secure financial relief—the sooner the better.
One housekeeping note: These CEO letters are an integral part of ACEC member communications during this crisis, but we're also providing critical updates on key issues for your firm and our industry through twice-weekly email digests of our Last Word newsletter. If you're not receiving Last Word or know of colleagues who are not receiving these letters or Last Word, please check to make sure that you or they haven’t inadvertently unsubscribed and that your firm’s email system has whitelisted ACEC.
Linda Bauer Darr, CEO
American Council of Engineering Companies
1015 15th Street NW, 8th Floor, Washington DC 20005-2605
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