On June 5, 2020 the President signed into law the Paycheck Protection Program Flexibility Act (PPPFA). The purpose of the PPPFA is to provide borrowers more flexibility in using PPP loan proceeds. The PPPFA highlights are as follows:
- PPP borrowers can choose to extend the 8 week forgiveness period to 24 weeks.
- PPP funds must now be used 60% for payroll costs vs. 75% in the original PPP guidelines. One caveat – the 60% payroll usage now appears to be a cliff, meaning that borrowers must spend at least 60% of loan proceeds on payroll or there will be no forgiveness. Under prior guidance there was the ability to get partial forgiveness. There is congressional discussion to fix this issue.
- Changes in workforce restoration provisions.
- Expansion of the availability to defer employer’s social security taxes and participate in the PPP program.
- Borrowers now have five years to repay any amounts not forgiven instead of two years.
We will be scheduling an upcoming Webinar to discuss these changes as well as the PPP forgiveness process.