The Paycheck Protection Flexibility Act of 2020 (H.R. 7010) which was passed by the House on May 28, 2020, was passed by the Senate by unanimous vote late on June 3, 2020. It was signed into law on Friday June 5, 2020 by President Trump.
This new bill amends the CARES Act Paycheck Protection Program by:
- Extending the date for PPP loan applications until December 31, 2020;
- Extending the period for the use of forgivable expenses until December 31, 2020;
- Raising the non-payroll portion of forgivable expenses to 40%;
- Requiring at least 60% of the loan proceeds must be used for payroll costs to qualify for loan forgiveness;
- Extending the time for rehiring or eliminating reductions in employment or salaries and wages until December 31, 2020;
- Eliminating the proportional reduction in loan forgiveness based on employee reduction provided the borrower can document they were unable to rehire employees, replace employees, or couldn’t return to the level of business activity before the pandemic, due to compliance with government guidelines;
- Extending the payment deferral to 10 months from receipt of the monies; and increases the maturity of the loan to five years;
- Allowing borrowers to continue deferring payment of certain payroll taxes even after the loan is forgiven.
Once it was signed into law, the bill became retroactive to March 27, 2020, the date the CARES Act was passed. There are however, additional points to be clarified such as the maximum compensation eligible for forgiveness for single employees or business owners; expenses that are eligible for forgiveness and other issues.
If you haven’t applied for your PPP loan, monies are still available so be sure to contact your SBA lender. As always, if you have any questions, please do not hesitate to contact us.