The Paycheck Protection Flexibility Act was signed into law on June 5th, 2020, and eases the requirements for a business owner to receive full forgiveness for their loan.
This extends the forgiveness period for the PPP loan from an 8 week period, to a 24 week period. This gives a business owner more time to use the funds they receive and still receive forgiveness.
Previously, in order to be eligible for full forgiveness, business owners had to use funds within 8 weeks of receiving the loan. The extension of the covered period will make this easier moving forward.
The act also includes an easing of the amount that was required to be spent on payroll costs. Previously, to obtain forgiveness 75% of the PPP funds needed to be used on payroll costs. Now, the threshold has been lowered to 60%. A customer is now able to spend more on utilities, rent or mortgage payments and still be eligible for full forgiveness of the loan.
The bill also extends the “safe harbor date” to December 31,2020. Previously, business owners who received a PPP had to restore full time employees or wages to the period they were prior to February 15th by June 30th ,2020.