COVID-19 UPDATE – PPP Reform Bill Signed into Law – HIGHLIGHTS
On Friday, June 6, 2020, President Trump signed the Paycheck Protection Program Flexibility Act (PPPFA), which significantly changed the Payroll Protection Program to address concerns raised by several recipients of these funds. This article highlights the “Need to Knows:” Trump Signs New Law Relaxing PPP Rules: What You Need To Know – Forbes. Some of the major changes consist of:
- The PPPFA reduces the amount of the loan needed to be spent on payroll from 75% to 60%, thus increasing the amount of funds available for other expenses from 25% to 40%;
- Businesses now have 24 weeks (instead of 8 weeks previously) to use the PPP funds;
- The deadline to rehire workers and still qualify for 100% forgiveness is December 31, 2020 (instead of June 30, 2020 previously);
- Businesses may still qualify for complete forgiveness even if they have a reduced headcount come January 1, 2021 if they can meet certain requirements centering around the inability to rehire workers; and
- If businesses do not qualify for complete forgiveness, they would have 5 years to repay the loan at 1.00% (instead of 2 years to repay previously).
This is a “win” for those businesses that received funding from the PPP. Businesses should still exercise extreme diligence in terms of record-keeping of the use of the PPP funds as the treasury guidelines remind us that the IRS has the ability to audit SBA loans, including the PPP loans. The Forgiveness Application has not changed, and it is a bear.