Paycheck Protection Program Flexibility Act: What You Should Know
Posted on June 8, 2020
By Scott Zickefoose, CPA, CM&AA, Transaction Advisory and Tax Senior Manager
What You Should Know About the Paycheck Protection Program Flexibility Act of 2020
The Senate recently passed H.R. 7010, the Paycheck Protection Program Flexibility Act of 2020. This legislation was previously passed by the House of Representatives on May 28, 2020, and is expected to be signed by the President.
“Paycheck Protection Program Flexibility Act of 2020” Excerpt:
This new Act makes substantive changes to the Payroll Protection Program (PPP) and allows borrowers more flexibility with respect to the PPP loan forgiveness process. Changes to the PPP loan forgiveness process have been outlined below.
Modifications Applicable to All Paycheck Protection Program Borrowers
- Borrowers can elect for their covered period to remain 8 weeks OR extend it to the earlier of 24 weeks from the date of first disbursement or December 31, 2020.
- To receive loan forgiveness under the new Act, a borrower must use at least 60 percent of the covered loan amount on payroll costs. The previous guidance from Treasury noted that 75 percent of the forgiveness amount must be attributable to payroll costs. It is important to note that the new language may imply that if the borrower does not expend at least 60 percent of the loan amount on payroll costs, there will be no forgiveness (a cliff test). This approach differs from the previous standard which would allow for partial forgiveness if less than 75 percent of the loan value was used for payroll costs.
We know things are hectic but remember to lean on your advisors (counsel, accountant) for insights they have, as many of these decisions in normal times are made infrequently.
We are here to answer your questions and assist in any way we can. We will be providing additional insights and updates as we move through this period of uncertainty.
Paycheck Protection Program Re-Hire Offers and Rejections Clarified
PPP Guidance: Allowable Tax Deductions for Business Expenses
PPP Loan Forgiveness Guidance Released
Clarifying the Paycheck Protection Program Loan Guidelines
Required Documentation for PPP Loan Forgiveness
Matt Austin Scott Zickefoose
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Phone: 804.433.4184 Phone: 804.273-6253
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