PPP Borrowers Get More Time and Flexibility
On June 5, 2020 the Paycheck Protection Program Flexibility Act of 2020 (H.R. 7010) was signed into law. H.R. 7010 will loosen the restrictions on Paycheck Protection Program (PPP) loan forgiveness and give borrowers more freedom to use funding for expenses other than payroll.
Here’s what you need to know about what H.R. 7010 will do for PPP loan borrowers:
- Triple the time PPP loan borrowers have to spend PPP funding from 8 weeks to 24 weeks or until December 31, 2020.
- Loosen standards for how much of PPP funding must be allocated to payroll in order to qualify for full loan forgiveness. PPP loan borrowers must spend at least 60% of their funding on payroll instead of 75%.
- Employers with PPP loans will now have until June 30, 2020 to rehire or suspend reductions in employment, salary, or wages in order to qualify for full forgiveness. Otherwise, loan forgiveness amounts will be reduced accordingly.
- H.R. 7010 will remove penalties for a reduction in headcount for business who are unable to rehire former employees, unable to hire similarly qualified employees, or who is unable to return to the same level of business activity due restrictions placed on them such as capacity limits or social distancing requirements due to COVID-19.
- PPP loan terms have been extended from two years to five years.
- All PPP loan borrowers will get access to the payroll tax deferral provisions of the CARES Act.
If you want to understand how you can get the full benefits of the PPP loan program, please contact a knowledgeable attorney today.