Late night on June 3, 2020, the Senate passed the House’s PPP Flexibility Act which is expected to be signed by the President shortly.
Main provisions/changes of the PPP Flexibility Act that will be discussed in detail include:
- “Covered Period” for spending PPP loan funds, and qualifying for forgiveness, has been extended from 8 weeks to 24 weeks (though no later than 12/31/2020)
- Percentage of the loan that must be used for payroll costs (in order to qualify for forgiveness) has been reduced from 75% to 60%
- Percentage of the loan that may be used for non-payroll costs increased from 25% to 40%
- Extends the period in which an employer may rehire or eliminate a reduction in employment, salary, or wages that would otherwise reduce the forgivable amount from 6/30/20 to 12/31/20.
- However, the forgivable amount must be determined without regard to a reduction in the number of employees if the recipient is (1) unable to rehire former employees and is unable to hire similarly qualified employees, or (2) unable to return to the same level of business activity due to compliance with federal requirements or guidance related to COVID-19.
- Deferment of loan payments extended from 6 months to 10 months
- Minimum loan maturity period extended from 2 years to 5 years
- Restores eligibility for Employer Payroll Tax deferral for businesses with forgiven PPP loans
This post will be updated as more information and clarification becomes available.