Paycheck Protection Program Flexibility Act Passes
New modifications to the Paycheck Protection Program make it easier for businesses to have their loans forgiven.
More time to use funds
Businesses now have a longer period to spend the funds: up to 24 weeks from origination or through December 31, 2020.
More non-payroll expenses allowed
The forgiveness limit on non-payroll expenses (rent, mortgage interest, and/or utilities) was increased from 25% to 40% of the overall PPP loan.
Lower Full-Time Equivalent (FTE) employee retention allowed
Loan forgiveness will not be reduced due to a lower number of FTEs if employers are unable to:
- Rehire a previous employee,
- Hire “similarly qualified employees” before Dec. 31, 2020, or
- Return to the “same level of business activity” as prior to Feb. 15, 2020 due to new standards for sanitation, social distancing, or any other safety requirements.
Longer loan terms
New PPP loans, disbursed after enactment of the Act, will have five-year loan terms. Lenders and borrowers are not prohibited from “mutually agreeing to modify the maturity terms of a covered loan.”
Payroll Tax Deferment
PPP borrowers will have full access to payroll tax deferment.The Paycheck Protection Program is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll.
Feel free to reach out to Rick or Mike directly for further clarification on PPP forgiveness, or ask your question via our contact form.
