Paycheck Protection Program Flexibility Act Signed Into Law
The Paycheck Protection Program Flexibility Act has been signed into law. As previously reported (https://boodlaw.com/2020/06/congress-passed-the-paycheck-protection-program-flexibility-act/), the benefits of the Paycheck Protection Program Flexibility Act include:
- Small businesses will now have more than just 8 weeks to use the PPP loan funds for acceptable purposes. The use period will be increased to 24 weeks after receipt of the PPP loan.
- The bill would provide more flexibility concerning the 75/25 rule for forgiveness of PPP loan funds by modifying the ratio to at least 60% on payroll and no more than 40% on other allowed costs, such as rent, mortgage payment, utilities, etc..
- New PPP loans issued after the bill is passed into law would have a 5-year loan term rather than a 2-year loan term for earlier issued PPP loans. Nothing would restrict lenders and borrowers of earlier obtained PPP loans from modifying the loan terms to extend the term of the loan.
- PPP borrowers will have full access to payroll tax deferment now. Previously this deferment was unavailable if the loan were to be forgiven.
Please let us know if you have any questions about these changes or the PPP Loan program in general.
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