Paycheck Protection Program Flexibility Act of 2020

On June 5, 2020, President Trump signed the Paycheck Protection Program Flexibility Act of 2020.  The bill modifies the provisions related to the forgiveness of loans made to small businesses under the PPP. These changes are especially beneficial to businesses who have not been allowed to reopen or have not been able to reopen at full capacity.

The highlights are as follows:

1)      Current borrowers can choose to file for forgiveness after 8 weeks or can choose to extend the period out to 24 weeks.  All new borrowers automatically have 24 weeks or until December 31, 2020, whichever comes first.

2)      The payroll requirement now drops to 60% of the funds, originally it was 75%.  Per SBA and Treasury guidance issued Monday, June 8, 2020, you can still get partial forgiveness if the ratio is not met.  It is not an “all or nothing” scenario that was reported earlier.

3)      Borrowers can use the 24-week period to restore their workforce and wages to pre-pandemic levels required for full forgiveness.  Before workforce and wage levels had to be met by June 30, 2020.

4)      Any amount of the loan not forgiven can now be paid back over five years instead of two.  The interest rate will remain at 1%.

5)      The bill allows businesses that took a PPP loan to also delay payment of their payroll taxes, which was prohibited under the CARES Act.

As always, if you have any questions please feel free to contact us. We are here to help!