UPDATE: The Paycheck Protection Program Flexibility Act of 2020 was signed into law on June 5, 2020.
We’ve been closely monitoring the proposed federal legislation which promised to expand some of the restrictive terms for Payroll Protection Program (“PPP”) loans.
Last week, the Paycheck Protection Program Flexibility Act of 2020 passed in the House. Last night it passed in the Senate. The Act does not become the new law on PPP unless it is signed by President Trump, but we expect he’ll sign it soon.
The Act creates major positive changes for PPP borrowers. Here’s what you need to know:
- The forgiveness period is extended from 8 weeks to 24 weeks or until December 31, 2020, whichever comes first.
- The 75/25 rule for payroll/non payroll expenses is changed to 60/40.
- New PPP loans will receive a 5-yr maturity (existing loans will remain at a 2-year maturity).
- Businesses that receive forgiveness will also receive payroll tax deferment.
- There is a new safe harbor for businesses that are required to open at only 50 percent capacity.
- The time period during which a business can apply for loan forgiveness is extended from six months to within 10 months of the last day of the covered period.
- PPP loan interest and payment of principal and fees will be deferred until the loan is forgiven by the lender.
Once the Act is signed, PPP borrowers must review these changes to ensure they will be eligible for loan forgiveness and to take advantage of the new benefits the Act will provide. Our team of attorneys is well-versed in the ever-changing PPP guidance and helps local businesses and organizations breathe easily knowing they’re doing everything they can to ensure forgiveness.
If you received a PPP loan or are thinking of applying for PPP funds and have questions, contact us. We’re here to help, and we’ll get through this together.