The ongoing response of the federal government to the COVID-19 crisis to protect the small business community continues to evolve. Last week the Paycheck Protection Program Flexibility Act of 2020 was signed into law. The Act significantly amends the Paycheck Protection Program (“PPP”) by giving small business owners that received PPP loans more freedom in how and when loan funds are spent while retaining the possibility of full forgiveness.
Here is a quick summary of some of the key provisions of the new law:
- Extends the expense forgiveness period from 8 weeks to 24 weeks;
- Reduces the 75% payroll ratio requirement to 60% percent;
- Extends the loan repayment term from two years to five years;
- Extends the payment deferment period from six months to the date the borrower is informed of the amount of their loan forgiveness;
- Adds the ability for small businesses that took a PPP loan to defer paying their payroll taxes; and
- Adds two new exceptions to let borrowers obtain full forgiveness even without fully restoring their workforce (e.g., if the borrower cannot find qualified employees, or if the borrower was unable to restore business operations to February 15, 2020 levels due to COVID-19 related operating restrictions).
The rules for the PPP continue to evolve at a moment’s notice, often leaving small business owners confused and frustrated as to how to keep up with the latest changes and get answers to their questions. The full text of the Act can be found here. For additional information and assistance with your small business legal and transaction needs, please contact Eric Perkins at [email protected] or (804) 205-5162.