The Paycheck Protection Flexibility Act: What You Need to Know
Last night the U.S. Senate passed the House version of the Paycheck Protection Program legislation (called the Paycheck Protection Flexibility Act). Some of the changes that resulted from this new legislation
- The time allotted for loan recipients to spend the PPP proceeds and still qualify for loan forgiveness has increased from 8 weeks to 24 weeks. A borrower can choose to extend the original 8 week period to 24 weeks or keep the initial 8 week period
- A business must now spend 60% of the PPP loan proceeds on payroll costs – down from 75% in the original law. The 60% requirement is now a cliff – which means borrowers must spend at least 60% on payroll costs, or the government would forgive NONE of the PPP loans. The old rules were you had to pay 75%, or the amount forgiven would be reduced.
- Borrowers can use the 24 weeks to restore their workforce to pre-virus levels required for full forgiveness. The borrower will have to restore the workforce by 12/31 – previously 6/30 was the deadline
- If you aren’t able to have all of the PPP loan forgiven, you will now have five years to repay. The interest rate remains at 1% per year.
- The new bill allows businesses that took a PPP loan also to delay paying some of their federal payroll taxes. The old rule prohibited this.
By the way, I did hear yesterday in a webinar that PPP loans are still available. So if you still qualify for a PPP loan and aren’t successful in getting one before, then contact your business banker about applying.
Let me know if you have any questions, and as always, we appreciate your business!