PPP Loan Program Extended

Written By: Jay L. Hack

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With well over $130 billion of unused Small Business Administration (“SBA”) guaranty authorization, out of $658 billion approved by Congress, Congress voted last week to extend the SBA’s authority to guarantee the Paycheck Protection Program loans through August 8. The President signed the extension on July 4. The SBA has not issued rules on the extension, but we anticipate that there will be no major changes.

Effective June 5, the law was amended to provide for a 24 week forgiveness period, but the forgiveness period may not extend beyond December 31, 2020. That worked if a loan was funded by June 30, but if a loan is funded on August 8, there will only be slightly less than 21 weeks before the end of the year. The SBA may allow new borrowers the benefit of the full 24 weeks, but 20 weeks through the end of the year should be more than enough time to pay expenses that justify 100% forgiveness. We recommend that any client that has not applied for a PPP loan should assume that the forgiveness period will end on December 31, 2020 subject to another change in SBA rules.

In the past few weeks, we have heard many inaccurate reasons why businesses have not applied for PPP loans. Other than businesses that do not qualify (e.g., passive investment business), and the occasional independent contractor whose loan amount is so small that the application is not worth the trouble, we recommend that all businesses that have suffered hardships due to COVID-19 and who have not filed for a PPP loan should review their decision carefully. They need to make sure that they are not basing their decision not to participate on incorrect rumors or false information.

If you need more information about the PPP loan program, you can read about it in our COVID-19 blogs of March 30, April 3, April 22, May 13, and June 8. We have already written 5 blogs on PPP loans because the statute and the rules are constantly changing. We will post another update to address the new statute and the relationship with the most recent rules on Tuesday, July 7, but we do not expect that will be the last update, so please check back for more current information before you make your final decisions.

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Jay L. Hack


Mr. Hack’s primary practice focus is providing a full range of legal services to banks and other financial institutions.

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