New Guidelines for Using PPP Funds
On Friday, June 5, President Trump signed the Paycheck Protection Program Flexibility Act (PPPFA). The Act modifies important provisions of the PPP previously outlined under the CARES Act.
Here are some important changes and how they may impact your business.
- The loan forgiveness period (covered period) has been extended from 8 weeks to 24 weeks for most borrowers.
- What that means: You have more time to incur costs eligible for forgiveness but must maintain certain employment and wage levels during the extended covered period.
- The percentage of PPP funds that must be used for payroll related costs has been reduced from 75% to 60%.
- What that means: You can use more of the PPP funds (up to a maximum of 40%) to pay for eligible non-payroll expenses, like utilities, rent, and mortgage interest during the covered period. However, if at least 60% of the PPP funds are not spent on eligible payroll costs during the extended covered period none of the loan will be forgiven.
- The period to repay the PPP loan has been extended from two years to five years for loans made after June 5, 2020. However, lenders and borrowers may renegotiate the maturity of any previously existing PPP loan.
- What this means: You may have more time to repay any portion of the PPP loan not eligible for forgiveness.
- The safe harbor period (the time you have to offer or rehire workers) has been extended to December 31, 2020.
- What this means: You may have until the December 31, 2020 to rehire employees and potentially still qualify for forgiveness (if all other qualifications and certifications are met).
Hosted by SC COVID-19 Business Support Project
Understanding Your Business' Legal Structure
Presented by: The Law Office of Ernest W. Cromartie, III
PPP Forgiveness Webinar
Presented by: Burkett Burkett & Burkett CPAs, P.A.
Stay tuned for more information.