On June 3, 2020, the US Senate approved the Paycheck Protection Program Flexibility Act of 2020. The Act will now go before the President for signature. This blog will highlight some key provisions that individuals/businesses who received loans under the Paycheck Protection Program (PPP) should be aware of.
First, the time period in which to spend the funds received under the PPP has been extended to twenty-four (24) weeks, rather than the original eight (8) weeks. Second, the Act contains an extension of time in which to count the number of employees a business has from the original date of June 30 to December 31. However, there is additional language in the Act related to exemptions based on employee availability that would not allow a reduction in employees to affect the amount of loan forgiveness, provided that the borrower meets certain conditions. Lastly, the proportion of funds that can be used for non-payroll purposes has been raised from its original limit of 25% to 40%.
Other notable provisions include an increase in the amount of time to pay the loan if the balance is not completely forgiven from two (2) years to five (5) years, as well as a repeal of an original provision in which PPP borrowers were not eligible to defer payroll tax payments.
Overall, this Act provides flexibility to borrowers under the PPP by loosening restrictions and extending deadlines. The full language of the Act can be found at: https://www.congress.gov/bill/116th-congress/house-bill/7010/text.