Paycheck Protection Program Flexibility Act of 2020 (“PPPFA”) - June 8, 2020
The PPPFA was signed into law by President Trump on June 5, 2020. The new law eases PPP loan requirements so that borrowers are better able to achieve full loan forgiveness. Following is a brief summary of the key provisions:
Borrowers now have 24 weeks to spend the loan funds, up from the eight week period specified under prior PPP loan guidance.
The percentage of the loan amount required to be used for payroll costs has been reduced from 75% to 60%, as a result 40% of the funds can now be used on qualifying non-payroll expenses.
FTE reductions will be allowed if the borrower is able to document in good faith their inability to rehire prior employees, fill open positions with similarly qualified employees, or return to the same level of business activity by December 31, 2020.
The loan deferral period has been increased from six months to ten months and the time frame to repay any portion of the loan not forgiven is now five years, up from the original two year period.
PPP Loan borrowers are now able to delay paying their payroll taxes in accordance with the employer payroll tax deferral provision of the CARES Act. Previously borrowers who obtained loan forgiveness were not permitted to delay payroll taxes.
The loan application deadline will not be extended beyond the original June 30, 2020 date.
Borrowers now have 24 weeks to spend the loan funds, up from the eight week period specified under prior PPP loan guidance.
The percentage of the loan amount required to be used for payroll costs has been reduced from 75% to 60%, as a result 40% of the funds can now be used on qualifying non-payroll expenses.
FTE reductions will be allowed if the borrower is able to document in good faith their inability to rehire prior employees, fill open positions with similarly qualified employees, or return to the same level of business activity by December 31, 2020.
The loan deferral period has been increased from six months to ten months and the time frame to repay any portion of the loan not forgiven is now five years, up from the original two year period.
PPP Loan borrowers are now able to delay paying their payroll taxes in accordance with the employer payroll tax deferral provision of the CARES Act. Previously borrowers who obtained loan forgiveness were not permitted to delay payroll taxes.
The loan application deadline will not be extended beyond the original June 30, 2020 date.