As expected, the House passed the Paycheck Protection Program Flexibility Act today, May 28, 2020. We were hoping the Senate might act on this in their Pro Forma session today, but it looks like we will have to wait until next week to see how the Senate responds to the bill.
The bill adds considerable flexibility that many small businesses have been asking for, below are some highlights:
- Reduces the amount forgiven required to be spent on payroll from 75% to 60%
- Extends the covered period businesses have to use the funds from 8 weeks to 24 weeks, or December 31, whichever is earlier
- Pushes back the deadline to rehire workers until December 31, 2020
- Extends the time companies have to repay the loan from 2-years to 5-years
- Allows companies who receive loan forgiveness to also defer payroll taxes
All of these items provide some welcome relief to those businesses worried about spending the funds and getting all of the loan forgiven. Once the Senate acts on the bill we will be sure to let you know.
The above represents our best understanding and interpretation of the material covered as of the date of this post. Things are moving at a rapid pace, and as such, information is subject to change. This information is provided for informational purposes only and is not intended to be a substitute for obtaining accounting, tax, or financial advice from an accountant.