Pamela Kweller RSSA Staff
The last couple months have been tough on most of the country, especially on small businesses. Fortunately, the Paycheck Protection Program (PPP) is still available along with some updates and more relief and flexibility for business owners.
On June 5, 2020 the President signed the Paycheck Protection Program Flexibility Act of 2020 also known as H.R. 7010. This is a bill that changes and improves the Paycheck Protection Program.
In late March, the President signed the $2 trillion CARES (Coronavirus Aid, Relief, and Economic Security) Act and one significant provision of that bill was this program. The Paycheck Protection Program is a Small Business Administration (SBA) loan that helps businesses keep their workforce employed during the COVID-19 pandemic. It was established to incentivize small businesses that keep their workers on the payroll.
Since the beginning, the Paycheck Protection Program has experienced many issues and has confused many Americans. Additionally, it has received a lot of criticism. However, the Paycheck Protection Program Flexibility Act of 2020 is a new bill that was recently approved by Senate and now signed by President Trump. It helps alleviate and improve some of the program’s issues.
What changes have been made to the Paycheck Protection Program?
- The loan repayment period is extended from 2 years to 5 years for any outstanding balance after forgiveness
- The covered period to use the loan and still qualify for forgiveness is extended from 8 weeks to 24 weeks upon receipt of the proceeds of the loan (or until 12/31/2020, whichever comes first)
- Rather than 75%, employers are now only required to use 60% of the forgiven amount for payroll (to have the loan forgiven, 60% or more must be used for payroll)
- The maximum portion of the loan used for non-payroll is increased from 25% to 40%
- Employers now have more time to rehire or eliminate a reduction in employment, salary, or wage – period is extended from June 30, 2020 to December 31, 2020
This legislation provides other forms of relief and flexibility for businesses, however there are still some flaws. It is important to educate yourself and understand what you sign up for.
If you are interested in a loan, PPP is still accepting loan applications. Kabbage helps you access these critical funds through a simple, online application. Apply today.