PPP Flexibility Act

PPP Flexibility Act

The Paycheck Protection Program Flexibility Act is new legislation that makes some much needed adjustments to the loan program, easing some restrictions on small businesses as they seek loan forgiveness. The bill is just awaiting President Trump’s signature.

Changes include:

-Current PPP borrowers can choose to extend the eight-week period to 24 weeks, or they can keep the original eight-week period. New PPP borrowers will have a 24-week covered period, but the covered period can’t extend beyond Dec. 31, 2020.

-This bill lowers the amount of the loan that needs to be spent on payroll from 75% to 60%. However, under the language of the bill, borrowers must spend at least 60% on payroll or none of the loan will be forgiven.

-New borrowers now have five years to repay the loan instead of two. Existing PPP loans can be extended up to 5 years if the lender and borrower agree. The interest rate remains at 1%.

-The legislation includes new exceptions allowing borrowers to achieve full PPP loan forgiveness even if they don’t fully restore their workforce. Previous guidance already allowed borrowers to exclude from those calculations employees who turned down good faith offers to be rehired at the same hours and wages as before the pandemic. The new bill allows borrowers to adjust because they could not find qualified employees or were unable to restore business operations to Feb. 15, 2020 levels due to COVID-19 related operating restrictions.

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

Even with these new regulations, there is still much that remains unclear regarding loan forgiveness for the PPP loan. As we receive additional guidance about loan forgiveness, we will keep you updated. As always, if you have any questions, please let us know.