Further Clarification on PPP Flexibility Act

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With the enactment of the Paycheck Protection Program Flexibility Act, many businesses that had received a PPP loan breathed a sigh of relief. Most notably, coverage periods for PPP spending have been extended from 8 weeks to 24 weeks, and the percentage of PPP funds required to be allocated to payroll costs has been reduced from 75% to 60%. But the language of the new law requires some interpretation and clarification.

The reduction in the minimum required percentage of PPP loan proceeds from 75% to 60% does NOT mean that if a company fails to meet the new minimum it will lose all chance at loan forgiveness. A joint statement from the SBA and U.S. Treasury assured borrowers that they would remain eligible for partial loan forgiveness if they spend less than 60% on payroll.
The increase in the maturity period of PPP loans from two years to five years only applies to loans approved on or after June 5, 2020. PPP loans approved prior to that date continue to have a two-year repayment period.
There are safe harbors for loan forgiveness for companies who are unable to bring back employees due to lower business activity or employee and customer safety requirements.
The cutoff date for applying for a PPP loan is June 30, 2020.

Managing a PPP loan and applying for loan forgiveness remains a complex process. If you need assistance or have questions, please contact Gray, Gray & Gray at (781) 407-0300.

On June 15th, we will be conducting a free webinar on the new PPP Flexibility law , how it applies to your business, and how to best document the use of PPP proceeds to maximize potential loan forgiveness.

New Webinar Just Announced!

Reprieve! Making the Most of the PPP Flexibility Act

A free webinar to answer important questions about the new Paycheck Protection Program guidelines

WEBINAR #11: Reprieve! Making the Most of the PPP Flexibility Act

Monday, June 15

1:00 pm - 2:00 pm EDT

The Small Business Administration's tight restrictions on Paycheck Protection Program (PPP) timing and loan allocation have been significantly eased by the recently enacted PPP Flexibility Act. Now your challenge is to understand the new rules and readjust your spending plans accordingly. This free webinar will help you gain a better comprehension of the new regulations in order to make the most of your PPP loan.

Gray, Gray & Gray's Jim DeLeo, Kelly Berardi, Brad Carlson and Derek Rawls will explain the new guidelines and offer practical advice on how to reallocate PPP funds to potentially maximize value for your business within the new loan forgiveness constraints. Among the topics to be covered in this one-hour webinar:

Expansion of the covered period from 8 weeks to 24 weeks
Increase of non-payroll spending from 25% to 40%
"Bright line" on payroll spending for loan forgiveness
Removal of loan forgiveness limits for non-returning employees
Allowance of a separate payroll tax deferral, currently prohibited to prevent "double dipping"
Extension of deadline for loan forgiveness application from six month to 10 months

Don't make the mistake of thinking the new PPP repayment rules will make things simpler. It is more important than ever to be familiar with the guidelines to make PPP work for you. Join us on June 15 to learn how.

CLICK HERE TO REGISTER

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