Congress passed legislation late Wednesday, June 3, that makes some major changes to the PPP loan program. The legislation, a bill called the Paycheck Protection Flexibility Act, was sent to the President who is expected to sign it.
The bill contains some major changes to the PPP loan program, which are summarized below:
- Current PPP borrowers can now choose to extend their eight-week covered period to 24 weeks.
- The “75/25 rule” has been modified: Now only 60% of the PPP funds must be used on payroll costs.
- Borrowers can use the 24-week period to restore workforce levels and wages to the pre-pandemic levels required for full forgiveness.
- Borrowers now can also avoid a forgiveness reduction if they could not find qualified employees to hire or were unable to restore business operations to Feb. 15, 2020 levels due to COVID-19-related operating restrictions.
- Borrowers will now have five (5) years to repay any amount that is considered a loan, as opposed to two (2) years.
We expect the Treasury to release more FAQs in the coming days as well. These FAQs will hopefully clear up some of the questions that we are still unable to answer for you at this time.
Along with the FAQs, we are expecting them to release an updated loan forgiveness application that takes the changes listed above into account.
We will continue to monitor the progress of this bill and strive to keep you updated with any news that becomes available.