Last night the Senate passed the Paycheck Protection Program (PPP) Flexibility Act of 2020 (H.R. 7010). The House of Representatives previously passed this bill so we are just waiting for the President to sign the bill which is expected shortly.
This bill will provide greater flexibility in the use of the PPP loan proceeds and should make it easier for a business to obtain forgiveness of the loan proceeds.
While the Act made changes to various aspects of the current PPP loan forgiveness requirements, further clarification and guidance is needed so we can fully understand the modifications.
Some key areas are:
The requirement to use 75% of the loan proceeds for payroll costs has been reduced to 60% (but it is not clear if partial forgiveness will still be allowed).
This means that up to 40% of the funds can be used for other authorized costs such as rent and utilities.
The “covered period” (period in which to use the loan) has been extended from 8 weeks to 24 weeks.
The repayment term of the loan (should you be required to do so) has been changed from 2 years to 5 years (this extended term applies to loans received after the date of this bill’s enactment but prior loan recipients who have the 2 year repayment term can ask their lender to extend it to 5 years also.
For borrowers who have lost employees, the bill offers a new way out to meet the test for full time equivalent employees.
The deferment of certain payroll taxes for businesses, that would no longer apply once a recipients PPP loan is forgiven, is now available after such date if the deferment period is still applicable.
Contact us should you have any questions.
AS ALWAYS, WAGNER & ZWERMAN IS HERE TO ANSWER ALL OF YOUR QUESTIONS AND CONCERNS. WE ARE ALL IN THIS TOGETHER.
** IF YOU HAVE MISSED ANY PREVIOUS WZ WEBINARS OR COMMUNICATION IN REGARDS TO COVID-19, PLEASE REFER TO OUR WEBSITE