Last night, the Senate passed the bill, which now heads to President Trump for his signature. If signed into law by the President, the bill known as the Payroll Protection Flexibility Actwill make significant favorable changes to SBA’s Paycheck Protection Program that encompasses the following:
Extend the “covered period” under which small businesses can spend the loan proceeds from eight weeks to 24 weeks or until December 31, 2020.
Remove the limits on loan forgiveness for small businesses that were unable to rehire employees, hire new employees, or return to the same level of business activity as before the virus.
Expand the 25% cap to use PPP funds on non-payroll expenses, such as rent, mortgage interest, and utilities, to 40% of the total loan, which lowers the 75% requirement for payroll expenses to 60% to get maximum forgiveness.
Allow small businesses to take a PPP loan and also qualify for a separate, recently enacted tax credit to defer payroll taxes, currently prohibited to prevent “double dipping.”
Extend the loan terms for any unforgiven portions that need to be repaid from two years to five years at 1% interest.
Give small businesses more time to rehire employees or to obtain forgiveness for the loan if social-distancing guidelines and health-related actions from the Centers for Disease Control and Prevention or other agencies prevented the business from operating at the same capacity as it had before March 1, 2020.
Extend the period for when a business can apply for loan forgiveness, from within six months to within 10 months of the last day of the covered period, before it must start making interest and principal payments. Under the new bill, PPP loan interest and payment of principal and fees will be deferred until the loan is forgiven by the lender.
Here’s a link to another article from theJournal of Accountancy. Stay tuned for updates on the ever-changing SBA Payroll Protection Program.
Disclaimer: Campbell & Company 2020-The information in this document is general in nature and the information is changing rapidly and there may be updated information as it becomes available from federal, state and local governments. We inform you that any tax advice contained in this communication (including any attachment) is not intended to be used, and cannot be used, for the purpose of avoiding penalties or promoting, marketing or recommending to another party any transaction or matter addressed.
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