The Paycheck Protection Program Flexibility Act of 2020
The U.S. Senate passed, by unanimous consent, the House Bill 7010, The Paycheck Protection Program Flexibility Act of 2020. The Bill must be signed by the President to become a law. The Bill provides more flexibility for small businesses who take out PPP forgivable loans.
Here is a general overview from GovTrack.us:
To amend the Small Business Act and the CARES Act to modify certain provisions related to the forgiveness of loans under the paycheck protection program, to allow recipients of loan forgiveness under the paycheck protection program to defer payroll taxes, and for other purposes.
This is vital to know and understand as a small business owner and here is why.
Some key provisions include:
- Extends the “Covered Period” to spend PPP loan proceeds from 8 to 24 weeks, to December 31, 2020.
- Modifies the 75%/25% (payroll/other costs) spending rule to 60%/40%, allowing for a greater share of forgivable spending on other covers expenses.
- Allows for more time for employers, to December 31, 2020, to rehire workers and not get hit with a forgiveness reduction penalty.
- Borrowers now have 5 years instead of 2, to repay any unforgivable part of the PPP loan.
- Borrowers are able to defer the employer’s share of FICA payroll taxes for 2 years (50%of payroll taxes will be due in 2021, with the remainder due in 2022).
June 5th the Bill was signed and approved by the President as you can see in the screenshot and timeline below.
Understanding how this affects the small business economy is part of our job here at Santomassimo Davis LLP, as we primarily focus in providing expert Outside General Counsel for a variety of law firms and legal issues related to Corporate and Business Law in New Jersey, New York and Pennsylvania.
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