Changes to the PPP Paycheck Protection Program
Updated: Jul 20, 2020
Good News for Small Businesses
On June 5, 2020, the President signed into law the Paycheck Protection Program Flexibility Act (PPPFA) to address the many concerns of small business owners regarding the PPP. The following is a brief description of the changes made through the PPPFA.
1. Changes amount of loan needed for payroll to 60%
The PPPFA reduces the amount of the loan to be spent on payroll from 75% to 60%, increasing the amount available for other expenses from 25% to 40%.
2. Extends time period to use funds from 8 to 24 weeks
Businesses can now spend the PPP funds during the remainder of the year. And, it doesn't require businesses to wait for 24 weeks to apply for forgiveness.
3. Pushes back a June 30 deadline to rehire workers to December 31, 2020
Under the new law, businesses now have until December 31, 2020, to rehire workers in order for their salaries to count towards forgiveness.
4. Eases rehire requirements
Itt extends the rehire date to December 31, 2020. It also adds additional exceptions for a reduced head count, so you can still receive forgiveness on payroll amounts.
5. Extends the repayment term from 2 years to 5
Five years to pay the loan at 1% interest. And the first payment will be deferred for six months after the SBA makes a determination on forgiveness.
This is a brief summary, for details see the National Law Review.