It’s all about FLEXIBILITY
On June 5th, the Paycheck Protection Program Flexibility Act (PPPFA) was passed. The PPPFA addresses some of the problems with the practical application of the PPP loan program. The biggest concern we hear from business owners is that they’re receiving the money before their businesses reopened in earnest. This meant using the PPP funds to pay workers to basically stay home.
Here is how the PPP loan program was changed to address this concern:
First, the PPPFA extends the time period to spend the PPP funds from 8 weeks to 24 weeks. This gives most businesses until almost the end of 2020 to use the funds on forgivable expenses. Since most businesses received loans equal to 2.5 months of payroll, this additional time should result in most loans being completely forgiven. Also, this let’s those businesses who remained closed longer use the funds to pay employees after they’ve returned to work..
Second, the PPPFA lowered the amount businesses are required to spend on payroll to earn full loan forgiveness from 75% to 60% . Businesses who were closed longer than others could benefit from using more funds for rent and non-payroll expenses.
Finally, businesses now have until the end of 2020 to rehire workers to meet “rehiring” requirements. Originally businesses needed to demonstrate they were back to full employment by June 30, 2020. The extra 6 months again benefits businesses that need longer to ramp up their operations.
There were some additional changes, such as extending the payoff of unforgiven loan funds from 2 years to 5 years.
Also, the first payment under the loan program is now due 6 months after the SBA makes a determination on your forgiveness application.
If you have any additional questions about your unique circumstances and PPP loan program, please call us at (561) 361-8700.