Over the past few months, the Paycheck Protection Program (PPP), established by the CARES Act and implemented by the Small Business Administration (SBA), has provided small businesses with funds to pay up to eight (8) weeks of eligible payroll and non-payroll costs in order to help retain its existing workforce during the COVID-19 emergency.
In addition to providing guaranteed loans, the SBA will forgive up to 100% of loan proceeds if the borrower completes the Paycheck Protection Program Loan Forgiveness application and specified requirements are met.
June 3, 2020, the Payroll Protection Program Flexibility Act was passed by both the House and Senate and is now waiting to be signed by the President. The act includes the following modifications:
The "covered period" for loan forgiveness has been extended from eight (8) weeks after the loan disbursement date to the earlier of 24 weeks from loan disbursement or December 31, 2020.
- The FTE Reduction Safe Harbor, which allows borrowers to be exempt from the loan forgiveness reduction if FTE employee levels are restored by a specified date, has been extended from June 30, 2020 to December 31, 2020.
- Previously, in order to qualify for loan forgiveness, the borrower was required to use 75% of the PPP loan proceeds on payroll costs. The PPP Flexibility Act has reduced this requirement to 60%; however, if the amount spent on payroll costs is less than 60%, 0% of the loan is forgiven.
- For loan proceeds that do not qualify for forgiveness, the loan maturity date has been increased from two (2) to five (5) years (1% interest rate has not changed)
Our team is available to provide clients with technical guidance and support to help ensure the maximum amount of forgivable loan proceeds.
Contact us today with any questions:
Director, Client Relations and Business Development