Under new PPP regulations, borrowers with loans dated June 5^th or earlier can elect to use either the original 8-week schedule or the new 24-week schedule to spend their PPP funding while still qualifying for forgiveness. Meanwhile, later borrowers are automatically subject to the 24-week period. For those early borrowers, there can be significant consequences – and benefits – depending on their decision – read on.

Tempted at 24 but maybe 8? Although many borrowers might be tempted to adopt the 24-week period because of the additional flexibility it provides, borrowers should understand the benefits of the original 8-week period. With an 8-week schedule, borrowers do not need to maintain full staffing for nearly as long. This means that they are much less likely to risk reductions in their forgiveness amounts due to losses in employee headcount or reduced work hours. Borrowers seeking new lines of credit may also benefit from eliminating their PPP debt early.  

24 Likely Best for Most. By contrast, the 24-week period gives borrowers much more flexibility because they can spread these expenses across a longer time period. This is especially important for businesses that have been forced to drastically cut employee hours due to social distancing orders and other similar government regulations. Borrowers who adopt for the 24-week period may also benefit from new SBA regulations that have not been adopted yet, but there is no guarantee.

Safety Makes Sense – Try this Out. One safe option is for borrowers to wait until the end of the 24-week period to determine which schedule they most benefit under because the SBA does not require pre-June 6^th applicants to certify which schedule they intend to use until it is time to apply for forgiveness. Because the question is not as straightforward as it seems, borrowers should consider speaking with their accountants and financial advisors to determine which plan is best for their businesses’ specific needs. Weiss LLP. June 20, 2020