As of June 5, 2020, the Paycheck Protection Program Flexibility Act (PPPFA) is now law. The Act makes it easier for recipients of Paycheck Protection Program (PPP) loans to qualify for forgiveness. That’s important to the millions of small businesses that received PPP loans. Here are the details:
First, and probably the most important news is that you now have more time to spend the proceeds of your loan. Remember all the talk about 8 weeks, and how you only had 8 weeks? Yeah, now you have 24 weeks! That's 24 weeks of utilities, mortgage interest or rent expense, payroll and retirement instead of 8 in order to use up your PPP funds.
This is an enormous help to all of us getting forvgiveness!
Now, after the PPPFA, 60% of loan proceeds must be spent on payroll costs, down from 75%. That means that forgivable non-payroll expenses can be as high as 40% of spending, up from 25%.
What qualifies as a forgivable expense has not changed.
If the new more flexible rules for forgiveness still do not allow you to qualify for total forgiveness, and you end up having an amount to repay, you now have more time to repay it. You will now have five years instead of two years to repay the amount.
The 1% interest rate has not changed.
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