by Alexandra P. Saddik and Jonathan R. Babione
On June 5, 2020, President Trump signed the Paycheck Protection Program Flexibility Act (PPPFA). The PPPFA is intended to provide employers with more flexibility in how they spend funds borrowed through the Paycheck Protection Program (PPP). Here are the main changes the PPPFA makes to the PPP:
Loan Repayment Period: The PPPFA extends the repayment period of the loan from 2 years to 5 years.
Loan Forgiveness: The PPPFA alters the loan forgiveness requirements.
Covered Period: The covered period for the loan has now been extended to December 31, 2020. Furthermore, instead of needing to use PPP funds in 8 weeks, employers can spread the loan out over 24 weeks.
Use of Funds: The PPPFA changes the allocation of funds. Instead of using 75% for payroll costs, employers only need to use 60% for payroll costs.
Payroll Requirements: Under the requirements of the original PPP, employers needed to maintain the same payroll to receive loan forgiveness. The PPPFA alters that by still allowing loan forgiveness even if payroll is reduced provided that the employer can document:
a) an inability to rehire employees and to hire similarly qualified employees for unfilled positions; or,
b) an inability to return to the same level of business activity the employer was operating at prior to February 15, 2020 due to complying with federal guidance and requirements for sanitation, social distancing, or other safety measures related to COVID-19.
Additionally, the PPPFA extends the rehiring period from June 30, 2020 to December 31, 2020.
The PPPFA’s changes to the PPP should help small businesses navigate this uncertain period more effectively, especially as California starts to reopen. Ferber Law is here to assist you with any questions you may have regarding the PPPFA.
DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.