United States Senators passed the Paycheck Protection Flexibility Act (PPFA) on Wednesday to give small businesses more wiggle room in how they spend federal loan dollars. The funds were given as part of previous CARES Act provisions through the Paycheck Protection Program (PPP), but had several restrictions that made it difficult for some businesses to have the loans forgiven. The Senate approved the measure by voice vote. The House approved the bill last week. PPFA now moves to the White House for President Trump’s signature.
PPFA makes several amendments to the PPP, which aims to help small businesses keep employees on payroll after public health measures designed to curb the pandemic forced them to shutter. Under the proposal, small businesses will be able to spend 60% of the loan money on payroll instead of the previous 75%. Additionally, they can use the funds for six months, which is a change from two months required by the original rule.
The update also extends a June 30th deadline to rehire workers, pushes back the timeline for repaying loans, and allows companies that get loan forgiveness to defer payroll taxes.
The legislation updates PPP provisions in other significant ways:
- It pushes back the timeline for repaying loans, and allows companies that qualify for loan forgiveness to defer payroll taxes.
- The minimum maturity is 5 years, instead of the 2 years previously stipulated. This applies only to loans made after the bill is signed into law.
- The bill changes the “covered period” from the 8-week period beginning on disbursement of the loan to the earlier of (i) the 24 weeks after the origination of the loan, or (ii) December 31, 2020.
- The bill changes the date by which employees that were laid off from February 15 – April 26, 2020 must be rehired by in order to achieve maximum forgiveness from June 30th to December 31, 2020. This allows companies significantly more time to adapt to the current economic climate.
Please consult your organization’s financial team to see how these updates will impact your business.
Reminder: The Census Matters
The recent relief funding appropriations for counties highlights the need for accurate Census counts. Forsyth County received significantly less than neighboring counties. The justification for that disparity is directly related to our population count. If you have not submitted answers to the Census questionnaire, please do so at your earliest convivence. You can respond by using the online portal.