Small-business owners now have some more flexibility and time in the federal government’s emergency forgivable loan program designed to help them during the coronavirus pandemic slowdown.
President Donald Trump on Friday signed the Paycheck Protection Program Flexibility Act, which relaxes several restrictions on companies that borrow money through the more than $650 billion Paycheck Protection Program (PPP).
The PPP loans from the U.S. Small Business Administration (SBA) help businesses keep their workforce employed during the coronavirus pandemic and get back on track.
The loan forgiveness changes in the new flexibility bill include extending the 8-week period during which businesses must use funds to have loans forgiven to 24 weeks or Dec. 31, whichever comes first. However, businesses that received a PPP loan before the bill was enacted could keep the current 8-week covered period.
That’s according to an email from Syracuse–based CPA firm Dannible & McKee, LLP that explains the changes in the new law.
The new law also extends to Dec. 31 from June 30 the period in which loans can be forgiven if businesses restore staffing or salary levels that were previously reduced. The provision would apply to employee and wage reductions made from Feb. 15 through April 26 that were restored by Dec. 31.
The newly signed legislation also extends the deadline to apply for a PPP loan to Dec. 31 from June 30.
In addition, the PPP Flexibility Act loosens restrictions limiting non-payroll expenses to 25 percent of loan proceeds. The new law adjusts the rules to a 60 percent payroll and 40 percent non-payroll split, the office of U.S. Representative Anthony Brindisi (D–Utica) said in a Friday news release.
“In order to survive, businesses must pay fixed costs. The PPP loans require that 75% of the loan go to payroll. For many businesses, payroll simply does not represent 75% of their monthly expenses and 25% does not leave enough to cover mortgage, rent, and utilities … Retaining employees is not possible if a business cannot retain their physical location,” per Brindisi’s office.
(Editor’s note: This article serves as an update to the article in the June 8 weekly edition story titled “Bonadio partner provides advice for contractors returning to work in pandemic.” President Trump on Friday signed legislation that updates some of the information in the article.)