PPP ALERT: PPP Flexibility Act of 2020

Change is inevitable.  The provisions and the application of the Paycheck Protection Program (“PPP”) are no different.

On June 3, 2020, the Senate approved H. R. 7010 (“HR 7010”), the “Paycheck Protection Program Flexibility Act of 2020”, a bill to modify certain provisions related to the forgiveness of loans under the Paycheck Protection Program, to allow recipients of loan forgiveness under the PPP to defer payroll taxes, and for other purposes.

Key provisions of HR 7010 include:

1. Loan maturity is extended from 2 years to 5 years.
2. The deferral period for loan repayments of principal and interest  is extended from not less than 6 months to not more than 1 year.
3. The covered period for the loan program is extended from June 30, 2020 to December 31, 2020.
4. The Senate is adding a letter to the Cares Act closing new loan applications as of June 30, 2020.
5. The covered period for loan forgiveness is extended from 8 weeks to the earlier of a) December 31, 2020; or b) 24 weeks from the of loan origination, but a borrower can elect to end the covered period for loan forgiveness at 8 weeks.
6. The Safe Harbor provisions for rehiring and restoration of  FTEs and Salary/Wage reductions are extended from June 30, 2020 to December 31, 2020.
7. HR 7010 increases the ratio of nonpayroll costs eligible for forgiveness from 25% to 40%.
8. Exceptions for the reduction of forgiveness related to a decline in FTEs, based on compliance with certain social distancing/safety requirements and/or aspects of employee availability.
9. Business that received a PPP loan can now defer federal employer payroll taxes as defined in the CARES Act.  Previously, the deferral was only allowed up to the date that forgiveness was granted

When the final Act becomes law, Citrin Cooperman will continue to keep you informed as to how these changes will impact your business.  With key dates extended under this Act, additional time is granted to allow for you to truly evaluation your options with regard to the uses of funds and the impact on forgiveness.  We will continue to inform you through our publications, e-mail blasts, and the continuation of our webinar series on the Paycheck Protection Program.

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