Today the President signed into the law the new Paycheck Protection Program Flexibility Act of 2020.
This act modifies provisions related to the forgiveness of loans made to small businesses under the Paycheck Protection Program implemented in response to COVID-19.
Specifically, the act establishes a minimum maturity of five years for a paycheck protection loan with a remaining balance after forgiveness. The act also extends the covered period during which a loan recipient may use such funds for certain expenses while remaining eligible for forgiveness. The act raises the non-payroll portion of a forgivable covered loan amount from the current 25% up to 40%.
The act extends the period in which an employer may rehire or eliminate a reduction in employment, salary, or wages that would otherwise reduce the forgivable amount of a paycheck protection loan. However, the forgivable amount must be determined without regard to a reduction in the number of employees if the recipient is
(1) unable to rehire former employees and is unable to to hire similarly qualified employees, or
(2) unable to return to the same level of business activity due to compliance with federal requirements or guidance related to COVID-19.
Additionally, the act revises the deferral period for paycheck protection loans, allowing recipients to defer payments until they receive compensation for forgiven amounts. Recipients who do not apply for forgiveness shall have 10 months from the program's expiration to begin making payments. The act also eliminates a provision that makes a paycheck protection loan recipient who has such indebtedness forgiven ineligible to defer payroll tax payments.
Lastly, the act is designated as an emergency requirement pursuant to the Statutory Pay-As-You-Go Act of 2010 (PAYGO) and the Senate PAYGO rule.
Link to the law and articles with more details are below!
