Here’s a quick breakdown of the Paycheck Protection Program Flexibility Act, which was passed by the House last week by a vote of 417-1.
This bill addresses many concerns and questions that small business owners had regarding loan forgiveness.
In short, the plan outlines the following:
- Extend the amount of time that businesses have to use the funds from 8 weeks to 24 weeks
- Push back the deadline to rehire workers from June 30 deadline to December 31, 2020
- Provide more leeway on loan forgiveness for those businesses who show they could not rehire workers or reopen due to safety standards
- Extend the time recipients have to repay the loan to 5 years
- Let companies that get loan forgiveness defer payroll taxes
Something that may not have been taken into account is that most small businesses will likely need an accountant and lawyer to figure out what portion of the loan is forgivable.
Until the Paycheck Protection Program Flexibility Act passes, here’s what small business owners need to be aware of regarding the current rules.
- The SBA can review any loan at any time.
- The loan forgiveness process could take up to 5 months.
- The borrower is responsible for forgiveness calculation.
- Employees must be rehired by June 30th.
- Loan forgiveness is tied to maintaining the same number of employees.
- Loan forgiveness is tied to maintaining wages.
- Owner employees and the self-employed payroll forgiveness capped at $15,385.
“While there is optimism in Washington that this new bill will reach President Trump’s desk for signature, there is no guarantee of when or if this may happen. And, until that occurs, the new and harsher Treasury regulations issued on May 22 will dictate how the PPP loan forgiveness process works.”