UPDATE: On Friday, June 5, 2020, the President has officially signed the Paycheck Protection Program Flexibility Act of 2020.
June 3, 2020
Late Wednesday night (June 3, 2020), the Senate signed the House Bill, Paycheck Protection Program Flexibility Act of 2020. The bill is expected to be signed by the President today.
The Bill will help small businesses gain more access to the PPP loan program and significantly modifies and eases forgiveness provisions.
Key Changes from the PPP Flexibility Act include:
- PPP borrowers will have the option to extend the eight-week period to 24 weeks.
- The requirement of how much the borrower has to spend on payroll decreased to 60% from 75%.
- By December 31, 2020, borrowers are required to restore their workforce levels and wages to pre-pandemic levels required for full forgiveness. Note: It remains unclear if the June 30, 2020 timeline for these items as laid out in the original CARES Act will be allowable for those electing the eight-week period.
- The Bill includes two new exemptions based on employee availability. Borrowers can determine a proportion reduction, if in good faith, they are able to document the inability to rehire those who were employees of the borrower on February 15, 2020 or the inability to hire similarly qualified employees for the unfilled positions.
- New borrowers now have five years to repay the loan instead of two. Current borrowers would need to mutually agree with the lender on an extension here. The interest rate remains at 1%.
- Borrowers can now also delay the payment of payroll taxes in certain circumstances.
The Paycheck Protection Flexibility Act of 2020 can be found here.
As your trusted advisors, we are committed to keeping you well-informed with any new legislation passed by Congress or other authorities as well as any new pronouncements by the Department of Treasury that may affect you. Please do not hesitate to reach out to KHA with any additional questions you may have.
This article and the sources referenced herein are provided for informational purposes only. KHA Accountants, PLLC, its partners and others do not provide any assurance as to the accuracy of these items or the information included therein. As such, KHA Accountants, PLLC cannot be held liable for any information derived from referenced sources. This by no means is a recommendation to obtain a loan or attempt to apply for a loan. There are many unknowns at this time regarding what other stimulus (grants or other loan options) that may become available with pending and future bills, executive orders, or emergency declarations to follow, that may become laws. Consult your legal and business advisors prior to making financing decisions. This is intended for illustrative and discussion purposes only.