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The Paycheck Protection Program Flexibility Act Is Here

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 ***UPDATE JUNE 16, 2020*** – The SBA and Treasury have released a revised loan forgiveness application and a new E-Z simplified loan forgiveness application. For more information on the revised loan forgiveness applications and instructions on how to complete the applications, please read Revised PPP Loan Forgiveness Applications Released on our website.

On Friday, June 5, 2020, the President signed into law the Paycheck Protection Program (PPP) Flexibility Act, which made the program’s lending terms more favorable to loan recipients. The timing of the legislation is particularly important since it provides structural changes to certain facets of the PPP program, including forgiveness factors used in potential loan forgiveness calculations.  On June 16, 2020, the SBA and Treasury released a revised loan forgiveness application and a new E-Z simplified loan forgiveness application. The guidance below may be subject to change. We will keep you informed.

Here are the essential points to the legislation:

  • Current PPP borrowers can choose to extend the eight-week period to 24 weeks. This flexibility is designed to make it easier for more borrowers to reach full, or almost full, forgiveness.
  • The payroll expenditure requirement drops to 60% from 75%, and for purposes of forgiveness, no more than 40% of the potential forgiven amount can be for non-payroll costs, same as when the 75%/25% requirement was originally imposed.
  • Borrowers can use the 24-week period to restore their workforce levels and wages to the pre-pandemic levels required to achieve full forgiveness.
  • The legislation includes two new exceptions allowing borrowers to achieve full PPP loan forgiveness even if they don’t fully restore their workforce.
  • PPP borrowers may have five years to repay the loan instead of two years at an interest rate of 1%.
  • The bill allows businesses that took a PPP loan to also delay payment of their payroll taxes, which was prohibited under the CARES Act.

We are committed to providing you with information and resources needed to make informed decisions for the future of your organization. We will continue to update this article with new information as it becomes available.

Please do not hesitate to contact us with any questions.

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