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The New Paycheck Protection Program Flexibility Act Is Signed Into Law Today

Originally posted on Forbes.com:

Easier To Qualify For Forgiveness

As of today, June 5, 2020, the Paycheck Protection Program Flexibility Act (PPPFA) is now law. Among other things, the Act makes it easier for recipients of Paycheck Protection Program (PPP) loans to qualify for forgiveness. That’s important to the millions of small businesses that received PPP loans.  

Let’s go through some of the changes. You can look up the new law here.   

Covered Period Extended

First, and probably the most important news is that borrowers now have more time to spend the loan proceeds.  

Before the PPPFA, spending had to occur within the “covered period” (8 weeks) of the receipt of the loan proceeds. That put a lot of pressure on businesses to make sure the funds were spent on forgivable expenditures. Now, borrowers have 24 weeks after the origination of the loan (or December 31, 2020, which ever is earlier).  

Payroll Costs Percentage Lowered

Second is a reduction in the amount that needs to go to payroll costs in order to qualify for forgiveness. Now, after the PPPFA, 60% of loan proceeds must be spent on payroll costs, down from 75%. That means that forgivable non-payroll expenses can be as high as 40% of spending, up from 25%. What qualifies as a forgivable expense has not changed.  

Repayment Period Lengthened

Third, the PPPFA gives borrowers whose loans are not forgiven more time (five years instead of two years) to repay the loan. The interest rate (1%) was not changed.  

Podcast

If you are interested in learning more about these and other aspects of PPP loans, I recommend signing up for Marcum LLP’s webinar scheduled for Wednesday June 10 at 2 pm EDT (alternate date Friday June 12 at 1 pm). Marcum LLP is one of the largest independent public accounting and advisory services firms in the nation.

The speakers (Ronald Friedman, Partner, Assurance Services and Jacquelyn Rysz, Manager, Tax and Business Services) will discuss the following questions:  

  • What expenses qualify for loan forgiveness?
  • How do I track the expenses that qualify for loan forgiveness?
  • What data / documents should I be accumulating and how do I accumulate it?
  • How can I prepare a budget and track my progress during the 24 week period?
  • What ideas may help me achieve 100% loan forgiveness?
  • Can I pick and choose which weeks I use PPP funds and which weeks I use general funds?

After you register, you can submit a question in advance of the webinar.  

Additional Resources

Here are additional PPP resources:

The subject of forgivable PPP loans is still evolving. More to come. . .


To read Julie Jason's books, go to https://juliejason.com/books/julies-books.