Changes to the PPP Loan : 6 Key Features

The Paycheck Protection Program Flexibility Act

On June 5th, 2020 the “Paycheck Protection Program Flexibility Act of 2020” was signed into law. This act works to relieve some of the restrictions originally placed on the Paycheck Protection Program small business loan. Although the bill has not yet passed this blog will point out 6 key features of the changes to possibly come in the near future.

  • Originally the loan had a set standard that 75% of proceeds must be utilized for payroll costs. With the provisions of this bill 60% or more of the loan must be used on payroll or none of the loan will be forgiven. 
  • The additional 40% or less still must be used on rent, mortgage payments, utilities, and interest on loans.
  • Current PPP borrowers  still may choose to keep the original 8 week period, but within this bill you have the option to extend the time period to 24 weeks. New PPP borrowers will have a 24 week covered period but this period may not surpass December 31, 2020.
  • This was put in place to better ensure that borrowers receive forgiveness for their loans. 
  • Borrowers will be able to utilize the 24 week period to restore their staff/workforce to the original pre-pandemic state required for full forgiveness. This MUST be done by December 31, 2020.
  • The interest rate remains 1% in this time.
  • Existing PPP loans can be extended up to 5 years if the lender and borrower agree. 
  • The employer can document in good faith they were unable to rehire individuals who were employees on Feb. 15, and that they were unable to hire similarly qualified individuals by Dec. 31. 
  • Also exempt from FTE reduction if the borrower is unable to return pre-COVID business levels due to HHS, CDC, or OSHA COVID-related requirements for sanitation, social distancing, worker safety, or customer safety.

It is important to note that one thing that has not changed is the deadline for applying.

The PPP loan program is still scheduled to end on June 30, 2020.

Information from this blog was pulled from the bill itself, for further guidance please refer to H.R.7010 – Paycheck Protection Program Flexibility Act of 2020.


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