On Friday, June 5, President Trump signed the Paycheck Protection Program (PPP) Flexibility Act, clearing the way for more flexibility and forgiveness of the loans made through the PPP. Originally these loans, which were part of the CARES Act, were provided to help business owners cover payroll costs, rent, and utilities.
The newly enacted legislation states that:
- Business owners now have 24 weeks to spend funds (up from eight weeks)
- Business owners only need to spend 60% of the loan on payroll costs (down from 75%)
- The covered period of the loan now ends December 31 instead of June 30
- Business owners won’t have to make employer payroll tax payments through the end of 2020
- The business will not lose any loan forgiveness eligibility if it can show that some employees declined to return to their jobs or the pre-pandemic headcount is no longer required
- The payback period for new loan applicants has been extended from two years to a minimum of five for those not seeking, or who are ineligible, for forgiveness