Home Health & Hospice Week

Legality of the change is still fuzzy, but providers will take it.

The feds might not be quite following the letter of the law when it comes to one added flexibility for Paycheck Protection Program loan forgiveness, but the change is still very welcome.

One of the requirements to qualify for forgiveness has been that businesses must spend 75 percent of their PPP funding on payroll expenses. If they didn’t, their forgiveness amount would be reduced accordingly.

Good: The new law has changed that benchmark to 60 percent. Lowering the threshold should allow more providers to qualify.

Bad: The way the law was written, it appears “borrowers who spend less than 60 percent of loan proceeds on payroll costs will not be entitled to any loan forgiveness (as opposed to a proportionate reduction in forgiveness),” explains law firm Sidley in online analysis. The new threshold appears to become a “forgiveness cliff.”

But the Trump administration moved quickly to quash that fear. On June 8, Treasury Secretary Steve Mnuchin and Small Business Administration head Jovita Carranza issued a release clarifying that “if a borrower uses less than 60 percent of the loan amount for payroll costs during the forgiveness covered period, the borrower will continue to be eligible for partial loan forgiveness.”

In an article for Forbes.com, attorney Alan Gassman says “we do not believe that the SBA or Treasury Department have the authority to change the statute in this way.” But the attorney with Gassman, Crotty & Denicolo in Clearwater, Florida, notes that nevertheless, “this is a welcome move towards what we expect the next iteration of the law to say, or for the SBA to follow, as a welcome change.”