The Paycheck Protection Program (PPP) Flexibility Act of 2020 was signed by the president on June 5, 2020. The bill will make significant changes to SBA’s Paycheck Protection Program, including:
- Extend the “covered period” under which small businesses can spend the loan proceeds from eight weeks to twenty-four weeks or until December 31, 2020.
- Remove the limits on loan forgiveness for small businesses that were unable to rehire employees, hire new employees, or return to the same level of business activity as before the virus.
- Expand the 25% cap to use PPP funds on nonpayroll expenses, such as rent, mortgage interest, and utilities, to 40% of the total loan, which lowers the 75% requirement for payroll expenses to 60% to get maximum forgiveness.
- Allow small businesses to take a PPP loan and also qualify for a separate, recently enacted tax credit to defer payroll taxes, currently prohibited to prevent “double dipping.”
- Extend the loan terms for any unforgiven portions that need to be repaid from two years to five years at 1% interest.
- Give small businesses more time to rehire employees or to obtain forgiveness for the loan if social-distancing and health-related guidelines have prevented them from operating at the same capacity as they were before March 1, 2020.
- Extend the period for when a business can apply for loan forgiveness to within ten months of the last day of the covered period, before it must start making interest and principal payments.
Learn more here.