Paycheck Protection Flexibility Act Adds Key Features to Existing Payroll Protection Program (PPP)
New Law Improves Provisions for PPP Loan Forgiveness
PPP Applications Accepted until June 30
The Paycheck Protection Program (PPP), provides short term loans to small businesses, thanks to the CARES Act. These loans may be eligible for full forgiveness if used for payroll and other business expenses. The PPP has provided loans to the majority of nonprofits that applied, and there are still PPP funds available through many lending institutions. In fact, as of June 16, 2020, Forbes reports that $130 billion in PPP funds is still available. Applications are only open until June 30, 2020, so it’s worth considering if you haven’t already applied. While many major banks are no longer accepting applications, you can search for an eligible SBA lender before the June 30 deadline.
The SBA is continuously releasing guidance that could impact the eligibility for partial or full loan forgiveness. And Congress improved key provisions of the PPP bypassing The Paycheck Protection Flexibility Act which became law on June 5th, 2020.
The following are some key points on the newly passed amendment.
- The covered period for forgiveness is extended from eight weeks to 24 weeks, or December 31, 2020, whichever is earlier.
- The period for allowable uses of the loan is extended from June 30, 2020, to December 31, 2020.
- The requirement that 75 percent of the amount forgiven must be on payroll costs is decreased to 60 percent. This allows for more freedom and flexibility to spend the money on non-payroll costs such as mortgage interest, rent, and utilities.
- The amendment adds a new exemption based on employee availability.
- The safe harbor period for rehires is extended from June 30, 2020, to December 31, 2020. This will give businesses who are still closed or partially closed more time to bring back furloughed or laid-off employees.
- The maturity date of the loan has been extended from two years to five years.
- The deferral period has been extended from six months to the date on which the amount of forgiveness is determined or 10 months after the last day of the covered period if the borrower fails to apply for forgiveness within 10 months.
- The amendment now allows borrowers who applied for PPP forgiveness to take advantage of Section 2302 of the CARES Act, which allows companies to delay the payment of payroll taxes.
Stay tuned to nextSteps; we expect there to be further clarification from the SBA in the coming weeks.
Pentacle remains dedicated to continuing to provide a high level of support to artists during these extraordinary circumstances. Alongside many other key and respected organizations in the field, we have begun accumulating and curating resources for artists and organizations experiencing income loss and other troubles as a result of the COVID-19 crisis.
Find help on how to account for PPP expenses through Financial Urgent Care.
NEXTSTEPS | 06.18.20