Paycheck Protection Program:
Paycheck Protection Flexibility Act
On June 3, 2020, the Senate unanimously passed the House’s Paycheck Protection Flexibility Act. President Trump is expected to sign the bill into law soon.
The bill makes the following key changes to the current PPP rules:
- Allows borrowers to choose between:
- Keeping their original 8-week loan period, or
- Expanding it to 24 weeks or December 31, 2020- whichever is earlier;
- Reduces the payroll expenditure requirement from 75% to 60%; however, borrowers must spend at least 60% on payroll or they will not receive any forgiveness;
- Allows borrowers to use the 24-week period to fully restore their workforce by the end of the year- moving the deadline from June 30, 2020 to December 31, 2020; and
- Allows borrowers 5 years to repay the loan instead of 2 years. The interest rate remains at 1%.
MBA’s team will be monitoring this legislation and will provide additional information as it is available.
The coronavirus has created many issues for employers to navigate. You can find MBA’s updates on these issues by going here. MBA will continue to update you as the coronavirus pandemic continues to impact employers.
Please consult with your own legal and tax advisors for advice regarding these changes and complying with the terms of your PPP loan.