Earlier this week, the U.S. Senate has passed the Paycheck Protection Program Flexibility Act. The House of Representatives passed the the bill on May 28th. It is expected to be signed by the President following his consideration, but expected very soon.
The new Act would give employers much more flexibility on how they use PPP funds while remaining eligible for loan forgiveness. Some of the highlights of the bill are:
- Employers would have to spend 60 percent—rather than the current 75 percent—of PPP funds on payroll costs. The additional 40 percent could be spent on mortgage interest, rent, utilities and other costs.
- Employers would also have 24 weeks—instead of eight weeks—to spend the loan proceeds.
- Employers would be able to defer payroll taxes even if they receive loan forgiveness.
- Currently, employers must rehire certain laid-off workers by June 30 to seek loan forgiveness, but the new bill would extend the deadline to Dec. 31, with exceptions based on employee availability.
- Loan repayment terms will be extended to five years.
We will continue to monitor the bill as it continues through the process and will provide extra clarification and guidance as it becomes available to us.
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