Senate Passes Bill to extend the PPP loan program for Small Businesses
By Ryan Vaughan and John Confrey
June 4, 2020
On June 3, 2020, the Senate passed the Paycheck Protection Program Flexibility Act (“the Act”) to provide business owners with more flexibility and time to use the funds eligible under the program for loan forgiveness.
- The Act extends the 8-week covered period, in which employers must use the funds in order to qualify for loan forgiveness, to the earlier of 24 weeks or December 31, 2020.
- The Act changes the 75/25 rule for payroll and non-payroll costs to 60/40. This reduces the amount of forgiveness costs required to be payroll-related to at least 60% and the remaining 40% can be used on eligible non-payroll costs.
- The Wage and FTE Reduction Exemption date is moved from June 30, 2020 to December 31, 2020.
- The Act expands the rehire exemption for the FTE Reduction.
- Eligibility for the Payroll Tax Deferral is extended.
- The Act also extends the deferral of payment until the date on which the amount of forgiveness determined under section 1106 of the “CARES Act” is remitted to the lender.
- Loans with a remaining balance after application of forgiveness now have a maturity of 5 years.
With this extension, further guidance is expected to be issued to assist business owners in navigating the Paycheck Protection Program.
As guidance and updates are released, we will be issuing further alerts and presenting additional webcasts.
Please stay tuned and contact your Mazars USA representative if you have further questions.