On June 5, President Trump signed the Paycheck Protection Program Flexibility Act (PPPFA) which allows employers greater flexibility when using Paycheck Protection Program (PPP) funds. While the initial plan was passed in March 2020, employers have given feedback that the requirements for forgiveness would be tough to meet. The intention behind the PPP was to assist small employers (those with less than 500 employees) with keeping their employees on payroll.
Employers who received PPP funds will now have 24 weeks or until December 31 to use their funds. This is a drastic change from the previous eight-week requirement. The amount that needs to be spent on payroll costs is now down to 60% from 75%.
Examples of payroll costs would be:
- Employee wages including salaries, tips, or commissions
- Employee benefits which covers insurance premiums, paid leave, and retirement benefits
- State and local taxes on pay
The remaining 40% of funds may be used on items like rent, utilities, or interest on mortgage payments. You should speak with your CPA, accounting professional, or banking representative for more detailed information.
Employers now have until December 31 to re-hire employees who were laid off instead of the previous June 30 deadline. Exceptions may apply and are determined based on employee availability. The PPPFA also allows borrowers the ability to defer payroll taxes while remaining eligible for forgiveness.
While this is a high-level summary of the new PPPFA, this is not all-encompassing. Please reach out to your lender for questions, clarification, or additional information.