On June 5, 2020, the President signed the Paycheck Protection Program Flexibility Act in an effort to give more time to use PPP funds. The main point of the Act was to increase the time to use the funds from 8 to 24 weeks for forgiveness potential.
The Act does not mean you will automatically be granted full forgiveness of the PPP loan. You still need to complete the SBA forgiveness application and submit it to your lender 24 weeks from when you received your funds. Your financial lender should notify you with their specific instructions for submission, however, I would mark your calendars to check in with them.
Current PPP borrowers can choose to extend the 8 week period to 24 weeks, or keep the original 8 week period. All new PPP borrowers will automatically have a 24 week period. If you want to stay with the 8 week period, contact your financial lender to begin the forgiveness application process. At this time, we are unaware of any benefits that honoring the original 8 week window offers.
Among the key provisions is a change in the threshold for the amount of PPP funds required to be spent on payroll costs to qualify for forgiveness to 60% of the loan amount. If you did not spend at least 60% on payroll, it is said that none of the PPP loan will be forgiven.
Borrowers now have 5 years to repay the loan instead of 2 for any amount that's not forgiven.
The bill allows for businesses that took a PPP loan to also delay payment of their payroll taxes, which was prohibited originally.
The forgiveness application takes into account the number of full time equivalent employees (FTE's) you have during the 24 week period compared to before the pandemic. The point of the PPP is to save jobs, if your FTE count decreases you must explain why in order to not lose forgiveness. If you have employees that refuse to work, you must get the refusal in writing. If you cannot work due to mandatory shutdowns, this must also be documented. We suggest having literature proving state shutdowns on file that are applicable to your particular business/industry. Simply choosing to not open, would likely not suffice.
New, PPP loan applications will remain open until June 30, 2020.