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.