The Paycheck Protection Program loans continue to confuse and amuse. I’ve been spending a lot of quality time with the June 1, 2020, Interim Final Rule, as published in the Federal Register. This isn’t the first Interim Final Rule, in fact, there are lots of them. Why don’t they just call them “Interim Rules” until they are truly final? Will the final version be called the “Final Final Rules?” Or maybe the “Final Interim Rules.”
And now, with the signing of the Paycheck Protection Flexibility Act on June 5th by our Fearless Leader, there are sure to be many more Interim Final Rules. Repayment of PPP loans will begin before the rules are finalized. Never mind, business owners are having to make spending decisions while the rules continue to change retroactively.
All these Interim Final Rules and Flexibility Act and still more changes to come remind me of the late George Carlin’s list of oxymorons. Maybe I’ll just order up some jumbo shrimp, put some non-dairy creamer in my coffee, plug in my wireless cable and consider my mandatory options. It’s a good thing I don’t work in government.
The new new rules are helpful to PPP loan borrowers. The PPP loans are based on 2019 average monthly payroll multiplied by 250 percent. Under the old rules the borrower needed to spend that 2.5 months of 2019 payroll in eight weeks, not two months, so that got a little tight. Since one could count benefits, state taxes, rent, interest and utilities, most borrowers were set to get most of their loans converted to grants; that is, forgiven.
The new rules allow the forgivable expenses to be incurred over 24 weeks, rather than eight. That is going to make it pretty darn easy for borrowers to get their entire loan forgiven. In addition, the minimum amount of the forgiven loan that must be spent on payroll has dropped from 75 percent to 60 percent and the “covered period” can extend as far as December 31, rather than June 30. All these changes make is easier to get the full amount of the loan forgiven.
This is all good in terms of getting money into the economy and increasing the deficit for our children and grandchildren. I shouldn’t be so cynical, because it is also helping businesses survive and preserve jobs. It also seems like manna from heaven for most businesses, who would have made it through this rough patch without the help.
Follow Up
A few weeks ago, I told you that I had ordered both a chicken and an egg from Amazon and that I would let you know how it worked out. So now I can let you know which came first.
The rooster came first.
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