The Senate recently passed the House version of Paycheck Protection Program (PPP) legislation which is expected to be signed into law by President Trump. Whether you are a current or prospective PPP borrower, the Paycheck Protection Flexibility Act brings favorable changes that you need to know about.

  • Current PPP borrowers can elect to extend the eight-week period to spend PPP proceeds on eligible costs to 24 weeks. New borrowers will automatically have until December 31, 2020, to do so.
  • Only 60% of PPP proceeds must now be spent on payroll expenditures to achieve loan forgiveness, down from 75%. However, the 60% requirement is now a cliff rather than a sliding scale as it was previously. If anything less than 60% is spent on payroll expenditures, than none of the loans will be forgiven. Technical corrections may be forthcoming to restore the sliding scale treatment, but a 60% cliff will be law until then.
  • Borrowers can use the new 24-week period to restore their workforce to the pre-pandemic levels required for loan forgiveness; that is, they have until December 31, 2020.
  • Two new exceptions were added which allow borrowers full PPP loan forgiveness despite not fully restoring their workforce. Borrowers may now adjust their workforce size calculation because they could not find qualified employees or were unable to restore business operations to pre-pandemic levels due to operating restrictions related to COVID-19.
  • Borrowers now have five years to repay PPP loans as opposed to two. The interest rate remains unchanged at 1%.
  • Businesses that took a PPP loan may now delay payment of their payroll taxes, which was previously prohibited under the CARES Act.

During this unpredictable and challenging time, it’s more important than ever to stay connected. We’re in this together and our thoughts go out to all that have been impacted by this unprecedented situation. Please feel free to contact us with any questions.