On June 5, 2020 the Paycheck Protection Flexibility Act of 2020 (PPPFA) was signed into law. The bill grants businesses more time and flexibility to use the proceeds from their Paycheck Protection Program (PPP) loans and remain eligible for forgivenes. Below is a summary of the legislation's main points.
Paycheck Protection Flexibility Act of 2020 We encourage you to work with your tax advisor or accountant to understand how these modifications may impact your specific situation.
Businesses now have 24 weeks (and no later than 12/31/2020) to spend the money. This is an increase from the original 8 week covered period.
Borrowers must spend at least 60% of the funds on payroll. This is a reduction from the original 75% requirement.
Increases the current limitation on non-payroll expenses (such as rent, utility payments and mortgage interest) for loan forgiveness from 25 to 40 percent
Extension of the period of time for employers to reverse decreases in employment and/or wage levels that occurred between February 15 and April 26, 2020 from June 30, 2020 to December 31, 2020.
Businesses are now allowed to receive PPP loans and defer payroll taxes. CARES Act originally made it an either-or choice.
As more guidance is released by the government, you can expect additional reporting and tools to become available.