The US Senate has now passed the House version of the Paycheck Protection Program (PPP) Flexibility Act and the President has signed the bill into law.
Major provisions of the act are:
Extension of the covered period to spend PPP loan proceeds from 8 weeks to 24 weeks; however, borrowers can choose to keep the original 8- week period.
Reduction in the amount of the loan proceeds that must be spent on payroll costs from 75% to 60%; however, if less than 60% of the loan proceeds are not spent on payroll costs there is NO loan forgiveness.
Extension of the period to restore the employer's workforce levels and wages to the pre-pandemic levels to qualify for full loan forgiveness to 24 weeks.
Addition of two new exemptions allowing employers to qualify for full loan forgiveness even if they do not fully restore their workforce. Employers will not be penalized for a reduction in full-time equivalents (FTE) due to the following:
They were unable to rehire previously laid off employees or similarly qualified employees; and
They were unable to restore business operations to the February 15, 2020 level due to COVID-19 related operating restrictions.
Extension of the deferral period for the start of loan repayment from 6 months to 1 year.
Extension of the deferral period of the 6.2% employer's share of social security taxes incurred from the date of loan forgiveness to December 31, 2020.