Signed on June 5, 2020, the Paycheck Protection Program Flexibility Act (PPPFA) addressed many flaws related to the Paycheck Protection Program (PPP) portion of the CARES Act. The intent and goal of the new PPPFA was to offer small businesses more flexibility in forgiveness of the loan. Hopefully, most will now receive full forgiveness because of these changes. Before we dive into the changes to the PPP, let’s review what the new legislation does not mean:

Paycheck Protection Program Flexibility Act does NOT increase the amount of the loan you receive. The new act provides small businesses with easier standards to qualify for forgiveness.

FIVE BIGGEST CHANGES included in the Paycheck Protection Flexibility Act and what it could mean for you:

1.       The minimum amount of the loan required to be spent on eligible payroll costs was lowered from 75% to 60%. Businesses can now use up to 40% on eligible non payroll costs (mortgage interest, rent, and utilities) and still be eligible for forgiveness.

 2.       The covered period has been extended from 8 weeks to 24 weeks. The covered period is time period the funds must be used in to qualify for forgiveness and begins once the funds are received. As stated above, this does not change the loan amount but allows small business more flexibility as to use the funds to coincide with additional

 3.       Standards have been reduced regarding the rehiring employees as business now have until December 31^st to rehire their employees instead of June 30^th. Further, those businesses that make a good faith effort to rehire employees (and are unable) can still potentially receive full forgiveness.

 4.       Borrowers of the PPP can delay the payment of employer Social Security Tax (not employee withholdings) until December of 2021 and December 2022 – payable in two equal payments.

 5.       For those that will not have full forgiveness, repayment period has been increased from two years to five years. The interest rate of 1% remains unchanged.

 If you have any questions about how the Paycheck Protection Program Flexibility Act affects you, you can reach us at 508-888-2000 or at info@fjhcpa.com. Also, the deadline for the PPP REMAINS June 30, 2020, so please be aware if you plan on applying.