June 04, 2020
On Wednesday night, the Senate voted unanimously in favor of the Paycheck Protection Flexibility Act. This bill is pending approval of the President. Upon approval, this new legislation would make key adjustments to the timeline for spending Paycheck Protection Program (PPP) funds and would revise how loan recipients would be required to allocate the money.
Here is a brief overview of the key provisions contained in the bill:
- Loan recipients would now have 24 weeks to spend the funds. Currently, they have eight weeks to spend the money on eligible costs to qualify for forgiveness.
- The percentage of the loan money required to be devoted to payroll costs would be reduced from 75% to 60%. This item would come with a new catch—if a borrower fails to spend at least 60% of the loan money on payroll costs, then the entire loan would not be forgivable.
- The term period for PPP loans could be extended from two years to five years.
- PPP loan recipients whose loans are forgiven would be allowed to delay payroll tax payments (the employer’s share of FICA payroll taxes) for two years.
- The deadline for rehiring employees and restoring wages to pre-pandemic levels would be extended from June 30, 2020 to December 31, 2020.
- Loan recipients would have more leeway on loan forgiveness if they can provide evidence that they were unable to recall a portion of their workforce or that it was not possible to reopen their business in a way that complies with safety standards.
The bill now heads to the President who is expected to sign it. We will continue to update you on the status of this bill and other updates as they become available. If you have questions or wish to discuss these matters, please contact us.