Paycheck Protection Program (PPP) Update
Last Friday, President Trump signed The Paycheck Protection Program Flexibility Act, H.R. 7010, into law. This legislation provides several updates to the Paycheck Protection Program (PPP) that are intended to bring the program into alignment with the legislative intent of Congress.
Changes under this act include:
- Extends the expense forgiveness period to 24 weeks (formerly 8 weeks).
- Reduces payroll ratio requirement to 60% (formerly 75%).
- Eliminates 2-year loan repayment restrictions (and extended to 5 years) for future borrowers.
- Allows payroll tax deferment for PPP recipients.
- Extends the rehiring deadline to December 31, 2020 (formerly June 30).
- Extends the deadline to apply for a PPP loan to December 31, 2020 (formerly June 30).
- Allows borrowers to defer principal and interest payments on PPP loans until the Small Business Administration (SBA) compensates lenders for any forgiven amounts, instead of the current 6-month deferral period. Borrowers that don’t apply for forgiveness would be given at least 10 months after the program expires to start making payments.
As always, with any new law, the application, interpretation and impact on individual businesses can vary, so I encourage you to seek guidance from your advisor or lender to determine how these PPP changes apply to you.