The Paycheck Protection Program Flexibility Act of 2020 (PPPFA) was signed into law on June 5th. The legislation has adjusted some of the requirements of the Payroll Protection Program (PPP), which has approximately 130 billion dollars in federal funds for private loans to small businesses that were affected by the Coronavirus. The PPP also offers loan forgiveness if eligible.
The legislators would like to increase program participation and make PPP compliance less complicated. The reform is a response to complaints by employers and input from small business groups about the PPP.
The PPPFA amendments are:
- PPP funds use extended from 8 to 24 weeks
- Deadline extensions for rehiring laid-off and/or furloughed workers and still qualify for loan forgiveness from June 30th to December 31st
- Reduced amount of PPP funds for payroll expenses from 75% to 60% to be eligible for loan forgiveness
- Borrowers will have five years instead of two years to repay their loan
- Deferment of payroll taxes of Borrowers even if they receive loan forgiveness
- PPP Lenders allowed to increase loans for partnerships
- Partnerships and seasonal employers will be allowed to borrow more PPP funds
- Seasonal employers will be permitted to calculate their average monthly payroll on February 15th 2020, or for an eight week period between February 15th 2019 and June 30th 2019
A major revision to the original PPP, businesses applying for loans under $2 million do not have to prove they were affected by Covid-19 the government understands companies with fewer resources will be applying for funds in good faith.
Click on the following link for the application form for loan forgiveness from the SBA and Treasury.
Lawmakers are hopeful about the new PPPFA with deadline extensions in billions of dollars in potential loans still available to help small businesses rebound and to help financially through the pandemic.