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President Signs Paycheck Protection Program Flexibility Act of 2020


On June 5, President Trump signed the Paycheck Protection Program Flexibility Act (PPPFA) of 2020 into law, which creates changes to the Small Business Administration's Paycheck Protection Program (PPP). The Act will have a substantial impact on small businesses that obtained a PPP loan under the CARES Act.
The Act eases restrictions on the utilization of PPP funding for purposes of debt forgiveness. Many small businesses are already approaching the end of their original covered period, so this new Act provides some much needed assistance.

The following is a summary of the legislation’s main points:

  • PPP borrowers can choose to extend the eight weeks to 24 weeks, or they can keep the original eight-week period.
  • The payroll expenditure requirement drops to 60 percent from 75 percent, but is now a cliff, meaning that borrowers must spend at least 60 percent on payroll, or none of the loan will be forgiven.
  • Borrowers can use the 24 weeks to restore their workforce levels and wages to the pre-pandemic levels required for full forgiveness. This must be done by December 31, a change from the previous deadline of June 30.
  • The legislation includes two new exceptions allowing borrowers to achieve full PPP loan forgiveness even if they don’t fully restore their workforce. The new bill allows borrowers to adjust because they could not find qualified employees or be unable to restore business operations to February 15, 2020, levels due to COVID-19 related operating restrictions.
  • New borrowers now have five years to repay the loan instead of two. The interest rate remains at 1 percent.
  • The bill allows businesses that took a PPP loan also to delay payment of their payroll taxes, which was prohibited under the CARES Act.

Three Steps to Loan Forgiveness

The PPP loan forgiveness process is likely to be time consuming and complicated, more so than the PPP application process itself. Calculations are complex and supporting documentation needs to be thorough and succinctly compiled. The Brown Smith Wallace CARES Act Loan Consulting team has customized services to fit your needs. Our full-service approach means you send us all the necessary information and we take care of the rest. Click here to get started.


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