Last night the Senate passed unanimously, the Paycheck Protection Flexibility Act. The House passed this legislation last week with a 417 to 1 vote. Congress is confident that this bill will be signed by the President.
Many businesses are currently in the 8-week covered period and are doing calculations for the forgiveness application. The Act will loosen requirements on the Paycheck Protection Program.
The major provisions:
- Borrowers can choose to extend the 8-week period to 24 weeks. This flexibility is designed to make it easier to reach full forgiveness.
- The payroll expenditure requirement drops to 60% from 75%, but is now a cliff, meaning that borrowers must spend at least 60% on payroll or none of the loan will be forgiven.
- The deadline for restoring payroll levels is now December 31, 2020, a change from the previous deadline of June 30th.
- Borrowers now have 5 years to repay the loan instead of 2. The interest rate remains at 1%.
- The bill allows businesses that took a PPP loan to also delay payment of their payroll taxes (FICA), which was prohibited under the CARES Act.
Additional guidance will be forthcoming.
This material is generic in nature. Before relying on the material in any important matter, users should note date of publication and carefully evaluate its accuracy, currency, completeness, and relevance for their purposes, and should obtain any appropriate professional advice relevant to their particular circumstances.