June 2020 News Flash – Congress Passes Paycheck Protection Program Revisions

CONGRESS PASSES REVISIONS TO THE
PAYCHECK PROTECTION PROGRAM

Late in the evening on June 3, 2020, the U.S. Senate passed a revision to the Paycheck Protection Program (“PPP”). This revision was already adopted by the U.S. House of Representatives. The bill, titled the Paycheck Protection Program Flexibility Act (“PPPFA”), now goes to President Donald Trump for his signature.  These new revisions provide businesses with much needed  flexibility on how and when they use the PPP loan money and, most importantly, enhanced opportunities to avail themselves of the loan forgiveness components of the program.

Significantly, “the bill establishes a minimum maturity of five years for a paycheck protection loan with a remaining balance after forgiveness.”  Another significant revision included in the PPPFA is the extension of time in which small businesses must use the loan money in order to qualify for loan forgiveness from eight (8) weeks under the PPP to twenty-four (24) weeks under the PPFA.  Additionally, under the PPP, businesses receiving the loans were required to use seventy-five percent (75%) of the funds received on payroll costs and no more than twenty-five percent (25%) of the funds on other costs in order to qualify for loan forgiveness.  Now, under the PPFA, businesses must now use only at least sixty percent (60%) of the funds on payroll and no more than forty percent (40%) on other costs outside of payroll.  The other costs include mortgage interest, rent under real and personal property written lease agreements and utilities. The PPPFA also extends the deadline, if certain criteria are met, to rehire employees or eliminate a reduction in employment, salary and/or wages to match the expiration of the enhanced unemployment insurance policy that was put in place under the CARES Act, from June 30, 3030 to December 31, 2020.  Further, the PPPFA revises the deferral period for paycheck protection loans, allowing businesses to defer payments until they receive compensation for forgiven amounts.  If a business does not apply for forgiveness, businesses still have ten (10) months from the program’s expiration to begin making payments.  It is important to note that the PPPFA eliminates a provision that makes a paycheck protection loan recipient who has the loan forgiven ineligible to defer payroll tax payments.  Under the PPPFA, employer payroll contributions of 6.2% are waived for two years. This is not an exhaustive list of the revisions made by the PPPFA, but rather the most significant changes made by the PPPFA.

We are available to assist you in these difficult times and discuss the specifics of your situation with you.

As an additional note, there are currently still funds available for small businesses under the PPP.  Contact our office to discuss your small business’s options in applying for PPP funds or if you have already received PPP funds, how the revisions included in the PPPFA impact your small business.