PPPFA Summary
Rules background

On June 5, 2020, President Trump signed into law the Paycheck Protection Program Flexibility Act (PPPFA) to assist in addressing YOUR pain points that the Paycheck Protection Program (PPP) brought about in ensuring that the monies loaned become forgivable. 

Here are the highlights:

  1. Of the total monies loaned, now only 60% needs to be spent on payroll (originally 75%).  This means that now 40% of the monies can be spent on rent, mortgage payments, utilities, and interest on loans. 
  2. PPPFA extends the time period to use these funds from 8 to 24 weeks.  While you still need to spend the monies on payroll and authorized expenses, you now have through the end of 2020 to do so.
  3. The REHIRE all your employees by June 30 has now been pushed back to December 31, 2020.   PPPFA did provide a bit of flexibility in this as well:
    • You can still be eligible for total forgiveness if you are unable to rehire an employee employed on or before February 15, 2020.  However, be sure to document the offer, refusal to return to work etc.  See our previous note for details.
    • If by the end of 2020 your business changes or you are unable to hire similar skill set employees, such as those employed on February 15, 2020, you may also be eligible for full forgiveness.  We hope there will be additional guidance issued relating to this.   
  4. If you are unable to have the entire P Loan forgiven, PPPFA has extended the repayment term from 2 to 5 years at 1% interest rate.

Do note that SBA still has the ability to audit the need for and use of the funds at its discretion to determine whether borrowers were actually ineligible to receive funds or are not eligible for loan forgiveness.  Now, DO NOT STRESS about this right now, as it is unlikely that SBA would conduct many audits as almost 4.5 million businesses have received PPP Loan monies to date and SBA does not have the capacity to conduct many reviews.  That said, it is terribly important to document the monies paid out in accordance with the SBA Loan Forgiveness Instructions and Application. 

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