The U.S. Senate has passed the Paycheck Protection Flexibility Act providing more relief for small businesses and other Paycheck Protection Program (PPP) loan recipients to spend the funds and still qualify for forgiveness of the loans.

Here are highlights from the proposed legislation:

  • Borrowers of the PPP loans will have flexibility to extend the eight-week period to 24 weeks. They can also choose to keep the original eight-week period, making it easier for more borrowers to reach full forgiveness.
  • Payroll expenditures will now go from a 75% test to a 60% cliff, meaning borrowers must spend at least 60% on payroll or none of the loan will be forgiven.
  • Borrowers will be able to leverage a 24-week period to restore their workforce levels and wages to the pre-pandemic levels required for full forgiveness by Dec. 31. This is a change from the previous deadline of June 30.
  • Exceptions will be allowed for borrowers to achieve full PPP loan forgiveness if they don’t restore their workforce due to not being able to find qualified employees or because they were unable to restore business operations to Feb. 15, 2020 levels due to operating restrictions. Currently, borrowers are allowed to exclude those employees who turned down good-faith offers to rehire at the same hours and wages as before the pandemic from the calculation.
  • Borrowers will have five years to repay the loan instead of two years at the 1% interest rate.
  • Borrowers will be eligible for the deferral of payment of the employer’s share of Social Security payroll taxes. In 2021, 50% of the taxes would be due and the remaining 50% would be due in 2022.

The legislation is expected to be signed into law by President Trump in the coming days. Doeren Mayhew is committed to keeping you informed of the legislation impacting your business and its PPP loan. Stay tuned, as we will provide an in-depth look once the act is signed into law. In the meantime, should you have any questions related to how this may impact your PPP loan, contact your trusted Doeren Mayhew advisor.