Paycheck Protection Program Reform Bill Provides Additional Flexibility to Small Business Owners

The Paycheck Protection Program (PPP) gained additional flexibility on Wednesday, June 3. Passing the Senate unanimously and the House last week, the legislation was signed by President Donald Trump on Friday, June 5. The PPP provides forgivable loans to small businesses to cover payroll and other qualified expenses during the COVID-19 crisis. 

The Paycheck Protection Flexibility Act of 2020 (H.R. 7010), extends the original eight-week period during which the loan proceeds had to be spent for forgiveness to the earlier of 24 weeks or December 31, 2020. This legislation also increases the loan terms from 2 to 5 years with principal and interest deferrals extended to six months after forgiveness is applied for.

The bill reduces the required percentage of funds to be used on payroll expenses from 75% to 60% while also appearing to restrict forgiveness to zero if that threshold is not met.

Quick Summary:

  • Unforgiven loan maturity from 2 to 5 years
  • Covered period extended from 6/30 to 12/31/2020
  • Extends covered period from 8 to 24 weeks
  • Payroll requirement decreased from 75% to 60% (Currently this may be a “cliff” with no forgiveness if the 60% isn’t met.)
  • Increased FTE leniency
  • Increased repayment deferral from 6 to 10 months
  • ER payroll tax deferral allowed even after forgiveness

We will continue to monitor and keep you updated as additional information and guidance is released. If you have any questions or concerns, please contact us at 517.323.7500 or email: maner@manercpa.com.