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On June 3, 2020, the Senate passed the Paycheck Protection Program Flexibility Act, previously passed by the House, significantly liberalizing the Paycheck Protection Program (“PPP”) loan forgiveness rules, extending the payroll tax deferral to loan recipients for periods after the loan is forgiven and extending the unforgiven portion loan term to five years.
The changes, when enacted, will simplify the qualification for loan forgiveness for many employers by allowing expenses to be incurred over a 24-week period instead of an eight-week period and extending the rehire date from June 30, 2020, to December 31, 2020. In addition, only 60 percent of the maximum loan forgiveness, not the current 75 percent, will need to be “payroll costs,” as defined under PPP.
Many small businesses have been struggling to incur enough wage costs to maximize their loan forgiveness, often as a result of reduced workforces. The bill makes a number of changes to help employers reach complete forgiveness of their PPP loans. Read our latest alert for more information.
If you have questions or concerns, please contact John Carpenter, Deb Walker or Sidney Glick.
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