The Paycheck Protection Program Flexibility Act (PPPFA) was signed into law this Friday. The document addresses many concerns regarding the Paycheck Protection Program (PPP) loans geared to provide financial relief to small business affected by the coronavirus outbreak.
Read on to discover the changes introduced by the PPPFA that give more options to small business owners who took out a PPP loan or are looking to apply for one.
Changes the Amount to Use on Payroll
Until today small businesses had to spend 75 percent of their PPP loans on payroll. The new act reduces that portion to 60 percent, leaving more room to pay other expenses. However, note that the expenses eligible for forgiveness are still the same: rent, mortgage, utilities, and interests on loans.
Extends Covered Period to Use Funds
Borrowers have now 24 weeks (or until December 31, 2020) to use their PPP loans. The period originally contemplated was eight weeks. This also means that borrowers using the new period will have to maintain payroll levels for an extra 16 weeks. Businesses who received their funds before the PPPFA was enacted can opt to stick with the original eight-week period.
Extends Deadline to Rehire Workers
According to the previous provisions, businesses had until June 30, 2020, to rehire its laid off workers. The PPPFA pushes back that deadline to December 31, 2020. This offers more flexibility to businesses that may have already reopened, but aren’t working a full capacity yet.
Creates a New Forgiveness Exemption
The PPPFA also introduces new forgiveness exemption in case businesses can’t rehire all its workers. This applies in the following circumstances:
- If a business can show that it was unsuccessful in trying to rehire workers that were employed on February 15, 2020, and it’s unable to rehire similarly qualified workers until December 31, 2020.
- If a business can show that it’s unable to return to the same level of business activity it had before February 15, 2020, due to compliance with requirements issued by DHHS, CDC or OSHA.
Extends Repayment Terms
Businesses whose loans are not forgiven will have more time to repay the funds, since the previous two-year period is now five years at the same original one percent interest rate.
Uniko Biz Solutions is here to help you find the best financing options for your small business. We provide flexible, intelligent alternatives to drive the growth of your organization.
We are located in Riverside, California. Contact us today by telephone (888-698-6456), email (firstname.lastname@example.org) or through social media and let’s craft together a financial solution tailored to meet the goals of your business.