Senate Passes PPP Loan Flexibility

6/4/20: This legislation is pending presidential signing

6/5/20: The president has signed this legislation

Key Provisions:

  • “Covered Period” is extended. Previously ending 8 weeks after origination or June 30th , it is now up to 24 weeks not to exceed December 31st. An 8 week period can still be elected, however.
  • Loan Forgiveness: previous limitation was that a minimum of 75% of the loan had to be used for payroll expenses.  The Flexibility Act decreases that to a minimum of 60% used for payroll expense. There is no longer a provision of pro-rating the loan forgiveness.
  • Additional provisions have been made to exclude employees, under specific circumstances, from the calculations of FTE employee counts for loan forgiveness.  Documentation requirements exist for the below exclusions;
    • Inability to rehire individuals who were on payroll as of Feb 15, 2020
    • Inability to hire similarly qualified individuals by Dec 31, 2020
    • Inability to return to same level of business you were operating at before Feb 15, 2020
  • Unforgiven portions of loans now have a maturity of 5 years
  • If no forgiveness is applied for, the first payment is due 10 months from the last day of the “covered period”.
  • PPP Loan participants under the CARES Act were excluded from provisions allowing employers to defer payment of employer payroll taxes, this exclusion has been removed by the Flexibility Act.

As always, please consult with your professional for specifics and how they impact your business.

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Mike Aikens

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