Following is a summary of the Paycheck Protection Program Flexibility Act enacted on June 5, 2020:
- Current PPP Borrowers extend the 8-week period to 24 weeks.
- New borrowers have a covered period of 24 weeks after the loan proceeds are received or 12/31/2020, whichever is earlier.
- The 75% payroll expenditure requirement is reduced to 60%.
- Borrowers can use the 24-week period to restore their workforce levels and wages to the pre-pandemic levels required for forgiveness. This must be done by 12/31/20.
- There are 2 new exceptions allowing borrowers to achieve full PPP loan forgiveness even if they don’t fully restore their workforce. You can exclude from calculations employees who turned down good faith offers to be rehired at the same hours and wages as before the pandemic. You can also adjust if you cannot find qualified employees or are unable to restore business operation to 2/15/20 levels due to COVID-19 related operating restrictions.
- Repayment period extended to five years for new loans.
- Businesses that took the PPP loan can delay payment of their 2020 remaining Social Security Payroll tax liability into 2021 and 2022. 50% of the deferred tax must be paid by 12/31/21 and the remainder must be paid by 12/31/22.
Please feel free to reach out to our office with any questions.
Chris Murphy, EA