On Wednesday, June 3, 2020, the Senate passed the HR 7010 - Paycheck Protection Program Flexibility Act of 2020. The bill is expected to be signed by President Trump today.
Tax Manager Dan Chodan, CPA discusses the changes made to the Paycheck Protection Program (PPP) Flexibility Act and additional insights regarding loan forgiveness. Watch the 10-minute video here: https://youtu.be/5bAEHbr-d30
The bill does the following:
- Businesses can choose to extend the 8 week period to 24 weeks or can keep the original 8 week period. This will give businesses who are still not able to open significantly more time to bring employees back to work and pay them with PPP funds.
- Changes the payroll costs requirement to at least 60% instead of 75% in order for the business to receive any forgiveness. Please note, the 60% is now a cliff. The business must spend 60% on payroll costs or NONE of the loan will be forgiven. Congress has indicated they will try to pass a technical correction to address this issue.
- Loan maturities extended from two to five years.
- Payment deferral period extended from six months to ten months.
- Added relief to employers who are not able to restore their workforce to pre-COVID-19 status.
- Grants borrowers up to ten months from the end of the 24 week period to submit an application for forgiveness.
- Defers 2020 employer FICA tax deposits due on and after 3/27/20 until the end of 2021 and 2022.
