Last week President Donald Trump signed legislation that will bring some significant changes to the Paycheck Protection Program (PPP). The amendment bill was passed by the Senate earlier in the week after having been passed by the House the week prior. The Paycheck Protection Program Flexibility Act of 2020 provides for adjustments to make the program more helpful for businesses that have been negatively impacted by the COVID-19 pandemic.
“Today, I have signed into law H.R. 7010, the “Paycheck Protection Program Flexibility Act of 2020” (the “Act”). The Act provides greater flexibility to restaurants, hotels, and other small businesses to use Federal Government loans under the Paycheck Protection Program to pay for payroll, employee benefits, and other expenses while weathering the coronavirus outbreak,” President Trump said in a statement. “Because the Act is essential to protecting jobs as the Nation begins to reopen the economy, I have signed the Act into law without delay.”
The PPP Flexibility Act greatly expands the period for coverage from eight weeks to 24 weeks, with a cutoff date of December 31. The extension will provide businesses with a longer window of time to spend the borrowed funds from the program. The changes also include an expansion of how the funding support can be used. The previous requirement that 75 percent of the funds needed to be used on payroll as dictated by the Small Business Administration has been reduced to 60 percent. The amendments to the PPP also make an extension to the safe harbor date. Employers will now have until December 31 to rehire employees that were laid off and restore the reduced wages of employees.
The PPP was established through the Coronavirus Aid, Relief, and Economic Security Act also known as the CARES Act. Small businesses with less than 500 employees who have been affected by the coronavirus are eligible for loan funding that can be 100 percent forgiven. The criteria for debt forgiveness have also been updated by the PPP Flexibility Act. The deadline to apply for PPP assistance is Tuesday, June 30.