The Paycheck Protection Program Flexibility Act (PPPFA) has officially been signed into law. The law was passed to address concerns by small businesses regarding the Paycheck Protection Program (PPP), giving small businesses more flexibility in how they spend the loan money, and to make it easier for small businesses to have their (PPP) loans forgiven.

Highlights of the PPPFA are:

  • Extends the period of time that businesses have to use the funds from 8 weeks to 24 weeks, giving businesses more time to spend the money. The PPPFA also does not require businesses to wait for 24 weeks to apply for forgiveness and can still do so after 8 weeks if they prefer.
  • Reduces the payroll spending amounts from 75% of loan funds to 60% of loan funds. This increases the amount of funds available for other expenses such as rent and utilities, giving businesses more flexibility in deciding how to allocate the funds.
  • Extends the June 30 deadline to hire back employees who were laid off to December 31, 2020 in order for their salaries to count towards forgiveness. The law did not change how salaries are calculated towards forgiveness. Employee compensation eligible for forgiveness is still capped at $100,000. Business owners and contractors are still capped at $15,385 of salary eligible for forgiveness.
  • Eases rehire requirements. In addition to extending the rehire date to December 31, 2020, the PPPFA adds additional exceptions for a reduced head count. The law states a business can still receive forgiveness on payroll amounts if it:
    • Is unable to rehire an individual who was an employee of the eligible recipient on or before February 15, 2020
    • Is able to demonstrate an inability to hire similarly qualified employees on or before December 31, 2020, or
    • Is able to demonstrate an inability to return to the same level of business activity as such business was operating at prior to February 15, 2020.
  • Extends the repayment term from 2 years to 5. A business will now have 5 years at 1% interest to repay the loan. The first payment will be deferred for 6 months after the SBA makes a determination on forgiveness. Currently, your bank has 60 days to make a forgiveness determination and the SBA has an additional 90 days. This means you could have until May 2021 to make the first loan payment for any portion not forgiven.

Keep in mind that according to the PPP Loans FAQs, the SBA can audit any loan at its discretion to determine if the borrower may be ineligible for a PPP loan, or maybe ineligible to receive the loan amount or loan forgiveness amount claimed by the borrower.

If you are in the process of applying for forgiveness, this may affect your planning. For guidance on CARES Act and PPP loan forgiveness, contact your lender or one of our tax professionals:

Daniel F. Griffin, CPA, CVA
Phone 315.701.6339 • Email [email protected]

Adam E. Panek, CPA
Phone 315.701.6328   •   Email [email protected]

Grossman St. Amour CPAs PLLC virtual doors are open and we are assisting our clients as usual on audit, accounting, and tax issues as well as matters relating to COVID-19.  As a certified public accounting firm located in central New York, Grossman St. Amour CPAs has been in business for over 60 years.  The firm provides businesses and individuals with accounting, audit, taxation, business planning and valuation, financial planning, investment consulting, and fraud examination and deterrence services.  For more information about how Grossman St. Amour CPAs PLLC can be of service to you, contact our professionals.

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