Has your business applied for and/or received funding from the Small Business Administrations’ Paycheck Protection Program (PPP)? If so, important changes have been signed into law by President Trump. Known as the Paycheck Protection Flexibility Act, this new law provides small businesses and other loan recipients of the Program more flexibility and time to use the loan money and still qualify to have the loan forgiven. One critical change this new law implements is a tripling of the timeframe small businesses have to use PPP funds – from 8 weeks to 24 weeks. Additionally, to be eligible for loan forgiveness, the new law changes the so-called 75/25 rule. This 75/25 rule, which requires recipients of funds to use three-quarters of the money for payroll costs and to limit other costs to no more than 25% in order to be eligible for loan forgiveness, has been changed to at least 60% on payroll and no more than 40% on other costs. Other changes include:

  • Borrowers can use the 24-week period to restore their workforce levels and wages to the pre-pandemic levels required for full forgiveness. This must be done by Dec. 31, a change from the previous deadline of June 30.
  • Borrowers now have five years to repay the loan instead of two. The interest rate remains at 1%.
  • The bill allows businesses that took a PPP loan to also delay payment of their payroll taxes, which was prohibited under the CARES Act.

If you are looking to start the PPP loan forgiveness process, the application can be found here. NKBA will continue to monitor the situation and provide our members other updates on the Federal government’s response to COVID-19.

 

NOTE: NKBA is providing this material for general information only. This information does not constitute the provision of legal advice, tax/investment advice, accounting services, or professional consulting of any kind, nor should it be construed as such. NKBA is not a lobbying organization and does not have a Political Action Committee (PAC). Resources such as this are meant solely for informational purposes.