On June 5, 2020 President Trump signed into law the Paycheck Protection Program Flexibility Act of 2020 that amended the Payroll Protection Program (PPP) giving borrowers more “flexibility” for forgiveness and /or repayment of their PPP Loans.
The Flexibility Act provided the following changes to the program:
- Borrowers can now use a 24 week covered period to spend their loan proceeds rather than the original 8 weeks.
- The original 75% payroll spending requirement was reduced to 60%.
- There are two exceptions that allow full forgiveness even without fully restoring their workforce.
- A new simplified forgiveness application has been released by the SBA. Updated PPP Forgiveness App
- Any amounts not forgiven can now be repaid over 5 years instead of 2.
- Payment of certain payroll taxes can be delayed even for businesses who received a PPP Loan.
In addition, on June 22, 2020 the SBA released new guidance to clarify the amendments made with the Flexibility Act:
- Borrowers can apply for forgiveness during the 24 week covered period
- Owners (includes S or C Corporation shareholders) forgiveness that was limited to $15,385 of their 2019 compensation for the 8 weeks increases to $20,833 of the relative compensation for the 24 week period.
- Additional exemptions were included relative to the inability to hire similarly qualified employees and for the inability to operate due to government restrictions.
If you have any questions or would like to discuss the impacts of these changes to the Paycheck Protection Program on your business, please feel free to contact us.
