Small businesses are receiving Paycheck Protection Program fixes
As of June 5, 2020, the Paycheck Protection Program Flexibility Act (PPPFA) is now law.
The Act makes it easier for recipients of Paycheck Protection Program (PPP) loans to qualify for forgiveness, which is crucial for small businesses, like water treatment dealerships, that received PPP loans.
One of the new changes allows forgiveness for expenses beyond the current eight-week period, according to the Hill. This will assist small businesses that have been required to close down or open at a limited capacity until they are able to fully reopen.
According to Forbes, this eight-week period put pressure on businesses to make sure the funds were spent on forgivable expenditures. Borrowers now have 24 weeks after the origination of the loan.
“The President’s signing of the Paycheck Protection Program Flexibility Act of 2020 into law is welcome news for small businesses across our nation,” said Kevin Kuhlman, vice president of government relations at the National Federation of Independent Business.
The next change is a reduction in the amount that needs to go to payroll costs in order to qualify for forgiveness. 60% of loan proceeds must be spent on payroll costs, which is a change from the original 75%. The PPPFA also gives borrowers whose loans are not forgiven five years instead of two years to repay the loan.
According to the Hill, the bill also extends the rehiring deadline. The PPP Flexibility Act will defer payroll taxes for businesses that receive PPP loans as well.