Raich Ende Malter and Co LLP issued the following announcement on June 5
The Paycheck Protection Program Flexibility Act of 2020 (the Act) was signed into law today. The Act makes certain changes to the Paycheck Protection Program (PPP), as follows:
- The covered period has been extended to December 31, 2020.
- Employers now have 24 weeks to spend the PPP proceeds.
- No new PPP loans can be originated after June 30, 2020.
- The amount of proceeds that must be spent on payroll costs to obtain full forgiveness has been reduced from 75% to 60%. This will allow for more of the PPP proceeds to be spent on items such as rent and utilities.
- Clarification has been provided on loan forgiveness if employees who have been offered a return to work refuse to do so or if the addition of staff creates an unsafe work environment as defined from certain government agencies.
- Employers that received PPP loans prior to June 4, 2020 may elect to retain the original eight-week covered period to spend the loan proceeds.
- The Act also allows employers that receive PPP loan forgiveness to continue deferring payment of the employer share of the Social Security tax under the CARES Act.
- Loan recipients can defer principal and interest payments on any portion of PPP loans that are not forgiven. The Act revised the deferral period from six months to the time when the SBA compensates the lender for the forgiven amount. However, repayments can be required if the borrower has not applied for forgiveness within ten months of the expiration of the borrower’s covered period.
- The term of PPP loans has been extended from two years to five years if both the bank and the borrower agree.
- Further changes and FAQs are expected.
This is an ongoing series of updates provided to help businesses attain financial aid to offset loss of revenue due to the COVID-19 pandemic. Previous articles in this series can be found here.
Original source can be found here.
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