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:
- Loan maturity is extended from 2 years to 5 years.
- The deferral period for loan repayments of principal and interest is extended from not less than 6 months to not more than 1 year.
- The covered period for the loan program is extended from June 30, 2020 to December 31, 2020.
- The Senate is adding a letter to the Cares Act closing new loan applications as of June 30, 2020.
- 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.
- The Safe Harbor provisions for rehiring and restoration of FTEs and Salary/Wage reductions are extended from June 30, 2020 to December 31, 2020.
- HR 7010 increases the ratio of nonpayroll costs eligible for forgiveness from 25% to 40%.
- 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.
- 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.
These materials provided by Citrin Cooperman are intended to provide general information on a particular subject or subjects and are not an exhaustive treatment of such subject(s) and are not intended to be a substitute for reading the rules and legislation. The materials are being provided with the understanding that the information contained therein should not be construed as legal advice or services. Before making a decision or action that may affect you or your business, you should consult with your attorney. The materials and the information contained therein are provided as is, and Citrin Cooperman makes no express or implied representations or warranties regarding these materials. In no event shall Citrin Cooperman, its affiliates, officers, principals and employees be liable to you or anyone else for any decision made or action taken in reliance on the information provided in these materials. The information and content provided in these materials is owned by Citrin Cooperman and should only be used for your personal or internal use and should not be copied, redistributed or otherwise provided to third parties.
Our specialists are here to help.
Get in touch with a specialist in your industry today.