Sweeping Changes to the Payroll Protection Program

On June 5, President Trump signed the Paycheck Protection Program Flexibility Act (PPPFA) of 2020, which amends the Paycheck Protection Program (PPP).

The changes include:

  • Extending the covered period where small businesses now have 24 weeks to spend the loan proceeds, or until December 31, whichever is earlier.
  • Removing the limits on loan forgiveness for PPP loan recipients that could not rehire employees or hire enough new employees to return to pre-virus numbers. An employer would need to show it :
    • is unable to rehire an individual who was an employee of the eligible recipient on or before February 15, 2020;
    • is able to demonstrate an inability to hire similarly qualified employees on or before December 31, 2020; or
    • is able to demonstrate an inability to return to the same level of business activity as such business was operating before February 15, 2020.
  • Providing more time to rehire employees to obtain loan forgiveness; employers now have until December 31, 2020.
  • Employers’ Full Time Equivalent counts are not necessarily adversely affected by employees who
    •  were terminated for cause
    •  voluntarily left
    •  voluntarily reduced their own hours
  • Expanding the 25% cap on using PPP funds on non-payroll expenses like rent and utilities. Loan recipients can now use up to 40% of the total loan funds, meaning 60% of the loan must still go to payroll expenses.
  • Expanding repayment term from 2 years to 5 years for any unforgiven portion of the PPP loan. Additionally, the first payment will be deferred for six months after the SBA determines the forgiven portion of the loan.
  • Allowing small businesses to participate in the portion of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) that will enable employers to defer payment of their portion of employees’ Social Security taxes.

Employers Council can help.  Please contact DMurphy@EmployersCouncil.org for more information.