Late Wednesday night June 3, 2020 the Senate passed major changes to the Paycheck Protection Program (PPP) loan program in the “Paycheck Protection Plan Flexibility Act”. President Trump signed the bill into law on Friday, June 5, 2020.
Specifically, the changes are expected to help Paycheck Protection Program (PPP) loan borrowers achieve loan forgiveness. The key changes to the Paycheck Protection Program (PPP) loan program are:
- Extending the period to use funds to 24 weeks (December 31, 2020 in many cases) from 8 weeks.
- No penalties on forgiveness amount if an employee chooses not to come back to work.
- Only 60% of the loan must be spent on payroll expenses (reduced from 75%). However, borrowers should note that the 60% threshold is now a “cliff,” and forgiveness will be denied for any amounts under the loan if the threshold is not met.
- The loan period increased from two years at 1% interest rate to a five-year loan.
Virtus Law, PLLC continues to monitor developments in this (and other COVID-19 areas) and will continue to post relevant updates to this website.