In a unanimous voice vote, the Senate on Wednesday approved the Paycheck Protection Flexibility Act, a bill designed to loosen the restrictions for PPP loan forgiveness.
The Act was initially passed by the House of Representatives on May 28, 2020 with a vote of 471-1. The Senate did not make any changes to the version that was passed in the House. The bill now moves to President Trump to be signed into law.
Key provisions of the Act include:
- An increase in the amount of time PPP recipients have to spend the proceeds (i.e., the covered period) from 8 weeks to 24 weeks. Borrowers can also opt to keep the original 8 week period.
- A decrease of the percentage recipients must spend on payroll-related costs to qualify for loan forgiveness from 75 percent to 60 percent.
- An extension of the deadline to rehire workers and restore wages from June 30, 2020 to December 31, 2020, in order to obtain full forgiveness.
- An ability to achieve full loan forgiveness even if the workforce is not fully restored in the event the borrower cannot find qualified employees, good faith offers to rehire employees are rejected, or business operations cannot be restored to February 15, 2020 levels due to COVID-19 operating restrictions.
- An extension of the minimum term period for the loans from two years to five years
- The ability for companies whose loans are forgiven to delay the payment of payroll taxes
This will undoubtedly extend the period in which companies can apply for forgiveness into 2021, and result in changes to the current Loan Forgiveness Application.
We will continue to update you as more information becomes available. If you have specific questions we recommend consulting your CPA or an Accounting firm.