Yesterday, the Senate passed the Paycheck Protection Program Flexibility Act (PPPFA). I think it will improve the ability of many borrowers to qualify for loan forgiveness. Under the PPPFA:
1. PPP borrowers can chose to extend the eight-week period to 24 weeks, or they can use the original eight-week period. It will make it easier for more borrowers to qualify for forgiveness.
2. The payroll expenditure requirement drops to from 75% to 60%. But, borrowers must spend at least 60% on payroll or none of the loan will be forgiven.
3. Borrowers can use the 24-week period to restore their workforce levels and wages to pre-pandemic levels required for full forgiveness. This must be done by December 31, 2020.
4. The legislation includes exceptions allowing borrowers to achieve full PPP loan forgiveness even if they don’t fully restore their workforce. Previous SBA guidance allowed borrowers to exclude from forgiveness calculations employees who turned down good faith offers to be rehired at the same hours and wages as before the pandemic. The PPPFA allows borrowers to adjust calculations because they could not find qualified employees or were unable to restore business operations to February 15, 2020 levels due to COVID-19 related operating restrictions.
5. Borrowers now have five years to repay the loan instead of two.
6. The bill allows borrowers to delay payment of their payroll taxes.
I can provide additional details and information about the PPPFA.
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