Paycheck Protection Program Flexibility Act Signed into Law

The Paycheck Protection Program Flexibility Act (PPPFA) was signed into law to ease the rules of the PPP. Below is a summary of the key changes:

Covered Period

• Borrowers now have 24 weeks from the disbursement of their loan to use PPP funds, or until Dec. 31 (the new program end date).
• Borrowers may still opt to use funds within the original eight-week period.

Payroll Costs

• Employers must spend 60% (reduced from 75%) of PPP funds on payroll costs, which include:
  • Salary, wages, commissions, and tips (up to $100,000 annualized per employee).
  • Employee benefits, such as paid leave, severance pay, insurance premiums, and retirement benefits.
  • State and local taxes assessed on pay.
• The remaining 40% may be spent on mortgage interest, rent, utilities, and other eligible costs.

Rehiring Requirements

• Employers now have until Dec. 31 (extended from June 30) to rehire certain laid-off workers for loan forgiveness.
• If an employee rejects a suitable offer of employment, employers must meet the following conditions to avoid a reduction in loan forgiveness:
  • Present a clear written offer letter to the laid-off worker.
  • Offer the same salary, wages, and number of hours as before the layoff.
  • Receive and document the rejection of the offer.
  • Maintain records of the offer and rejection in the PPP loan forgiveness file.
  • Notify the state unemployment office within 30 days of the offer’s rejection.

Loan Maturity

• The maturity date for any unforgiven portion of a PPP loan is extended from two years to five years.
• For existing PPP loans, lenders and borrowers may mutually agree to modify the maturity terms.

These changes provide more flexibility for loan usage and forgiveness. Questions regarding the PPPFA are welcome.