The President signed into law the Payroll Protection Program Flexibility Act on 06/05/2020. The major provisions of this Act are as follows:
- The covered period is extended to the earlier of 24 weeks from the date the PPP loans were disbursed or 12/31/2020. Existing borrowers with loan originations prior to the enactment of this Act can elect to keep an 8 week covered period from the date the funds were disbursed.
- The deadline for new PPP loan applications continues to be 06/30/2020.
- The 75% payroll cost requirement is reduced to 60%. If the 60% payroll cost is not met, the loan is eligible for partial forgiveness.
- The FTE Reduction Safe Harbor is extended to 12/31/2020 from 06/30/2020. This allows more time to rehire former employees (or hire new employees) and restore salary levels.
- There are new exceptions for the FTE reduction calculation as long as the borrower, in good faith, can document that the company was unable to:
- Rehire former employees who were employed as of 02/15/2020 AND hire similarly qualified employees for unfilled positions on or before 12/31/2020; OR
- Return to the same level of business operating activity to 02/15/2020 levels due to compliance with requirements issued by the CDC, HHS, or OSHA during the period 03/1/2020 to 12/31/2020.
- The maturity of PPP loans existing before the date of this Act, 06/05/2020, can be extended from two to five years if the lender and borrower agree. PPP loans after the date of this Act will have a five year maturity.
Treasury will be releasing a revised loan forgiveness application and new guidance soon.