Revisions to the Paycheck Protection Program Flexibility Act Explained

Bipartisan bill provides forgiveness relief to businesses with loans obtained before June 30.

6/8/2020 11:00 AM

AdvocacyNewsCOVID-19
Revisions to the Paycheck Protection Program Flexibility Act Explained

Reforms to the Paycheck Protection Program (PPP) established under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) bill—including extending the availability of the program for small businesses—are in the works after a vote in the U.S. Senate and approval from President Donald Trump last week.

The PPP was implemented to allow qualifying small businesses access to low-interest loans equaling 2.5 times their average monthly payroll, up to $10 million, according to a summary from U.S. Sen. John Thune’s, R-S.D., office. The funds (60 %) are for retaining workers and other eligible business expenses (40 %), such as mortgage interest, rent and utilities.

Additional highlights of the Paycheck Protection Program Flexibility Act of 2020, according to the summary, include:

  • The PPP is now in effect through Dec. 31, 2020, however new loans will not be allowed after June 30, 2020.
  • Businesses have 24 weeks, instead of eight, to spend their PPP loan after the date of origination.
  • Loan forgiveness amounts will not be reduced because an employee does not return to work, so long as businesses make a good faith effort to rehire employees.
  • Businesses that receive a PPP loan are also eligible to defer payment of their payroll taxes over the next two years.

The U.S. Small Business Administration (SBA) and U.S. Department of the Treasury in May released a PPP loan forgiveness application, that will be updated to reflect changes in the program

According to a news release from the SBA and Treasury, there will be rules and guidance to implement the legislative amendments to the PPP as well as a modified borrower application form and modified loan forgiveness application.

 These modifications, according to the SBA and Treasury, will implement the important changes such as:

  • Extend the covered period for loan forgiveness from eight weeks after the date of loan disbursement to 24 weeks after the date of loan disbursement, providing substantially greater flexibility for borrowers to qualify for loan forgiveness. Borrowers who have already received PPP loans retain the option to use an eight-week covered period.
  • Provide a safe harbor from reductions in loan forgiveness based on reductions in full-time equivalent employees for borrowers that are unable to return to the same level of business activity the business was operating at before Feb. 15, 2020, due to compliance with requirements or guidance issued between March 1, 2020 and Dec. 31, 2020 by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to worker or customer safety requirements related to COVID-19.
  • Provide a safe harbor from reductions in loan forgiveness based on reductions in full-time equivalent employees, to provide protections for borrowers that are both unable to rehire individuals who were employees of the borrower on Feb. 15, 2020, and unable to hire similarly qualified employees for unfilled positions by Dec. 31, 2020.

Members are invited to tune in to the next ACA Weekly Huddle on Wednesday, June 10, for an update on Capitol Hill activity and regulations at 11 a.m. Central.

ACA’s past Daily Huddles in April focused on guidance on the SBA Loan Programs.

Members may listen here:

Working with the Small Business Administration

Exploring New Guidance on the SBA Loan Programs

Related Content from ACA International:

Paycheck Protection Program Fixes Approved by U.S. Senate


Follow ACA International on Twitter @ACAIntl and @acacollector, Facebook and request to join our LinkedIn group for news and event updates. ACA International members are welcome to submit news items for possible publication to comm@acainternational.org. Visit our publications page for news submission guidelines and subscriptions to ACA Daily, Collector magazine and Pulse.

Advertising is available for companies wishing to promote their products or services. Be sure to visit the ACA Events Calendar on the Education and Training page to view our listing of upcoming CORE Curriculum and Hot Topic seminars featuring critical educational opportunities for your company.


Subscribe to ACA Daily NEWSROOM

Revisions to the Paycheck Protection Program Flexibility Act Explained

Reforms to the Paycheck Protection Program (PPP) established under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) bill—including extending the availability of the program for small businesses—are in the works after a vote in the U.S. Senate and approval from President Donald Trump last week.

The PPP was implemented to allow qualifying small businesses access to low-interest loans equaling 2.5 times their average monthly payroll, up to $10 million, according to a summary from U.S. Sen. John Thune’s, R-S.D., office. The funds (60 %) are for retaining workers and other eligible business expenses (40 %), such as mortgage interest, rent and utilities.

Additional highlights of the Paycheck Protection Program Flexibility Act of 2020, according to the summary, include:

  • The PPP is now in effect through Dec. 31, 2020, however new loans will not be allowed after June 30, 2020.
  • Businesses have 24 weeks, instead of eight, to spend their PPP loan after the date of origination.
  • Loan forgiveness amounts will not be reduced because an employee does not return to work, so long as businesses make a good faith effort to rehire employees.
  • Businesses that receive a PPP loan are also eligible to defer payment of their payroll taxes over the next two years.

The U.S. Small Business Administration (SBA) and U.S. Department of the Treasury in May released a PPP loan forgiveness application, that will be updated to reflect changes in the program

According to a news release from the SBA and Treasury, there will be rules and guidance to implement the legislative amendments to the PPP as well as a modified borrower application form and modified loan forgiveness application.

 These modifications, according to the SBA and Treasury, will implement the important changes such as:

  • Extend the covered period for loan forgiveness from eight weeks after the date of loan disbursement to 24 weeks after the date of loan disbursement, providing substantially greater flexibility for borrowers to qualify for loan forgiveness. Borrowers who have already received PPP loans retain the option to use an eight-week covered period.
  • Provide a safe harbor from reductions in loan forgiveness based on reductions in full-time equivalent employees for borrowers that are unable to return to the same level of business activity the business was operating at before Feb. 15, 2020, due to compliance with requirements or guidance issued between March 1, 2020 and Dec. 31, 2020 by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to worker or customer safety requirements related to COVID-19.
  • Provide a safe harbor from reductions in loan forgiveness based on reductions in full-time equivalent employees, to provide protections for borrowers that are both unable to rehire individuals who were employees of the borrower on Feb. 15, 2020, and unable to hire similarly qualified employees for unfilled positions by Dec. 31, 2020.

Members are invited to tune in to the next ACA Weekly Huddle on Wednesday, June 10, for an update on Capitol Hill activity and regulations at 11 a.m. Central.

ACA’s past Daily Huddles in April focused on guidance on the SBA Loan Programs.

Members may listen here:

Working with the Small Business Administration

Exploring New Guidance on the SBA Loan Programs

Related Content from ACA International:

Paycheck Protection Program Fixes Approved by U.S. Senate


Follow ACA International on Twitter @ACAIntl and @acacollector, Facebook and request to join our LinkedIn group for news and event updates. ACA International members are welcome to submit news items for possible publication to comm@acainternational.org. Visit our publications page for news submission guidelines and subscriptions to ACA Daily, Collector magazine and Pulse.

Advertising is available for companies wishing to promote their products or services. Be sure to visit the ACA Events Calendar on the Education and Training page to view our listing of upcoming CORE Curriculum and Hot Topic seminars featuring critical educational opportunities for your company.


Subscribe to ACA Daily NEWSROOM

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