PPP Update: Paycheck Protection Program Flexibility Act (PPPFA) Becomes Law
Congress has passed — and today the President signed — the Paycheck Protection Program Flexibility Act (PPPFA). Among its major provisions, the bill provides borrowers with additional flexibility and time to use PPP loan funds and still receive forgiveness on the loan. Highlights of the bill and lingering questions include:
PPPFA extends time period to use funds from 8 to 24 weeks.
Borrowers now have 24 weeks from the disbursement of their loan to use PPP funds, though they may still elect to use the 8 week period if beneficial.
Big Question: Does this mean 24 weeks of payroll or just 8 weeks of payroll that can be expended over 24 weeks? Guidance is still pending.
PPPFA reduces the amount of the loan needed to be spent on payroll from 75% to 60%.
Borrowers may now spend up to 40% of PPP funds on approved non-payroll expenses such as rent, utilities, and mortgage interest.
PPPFA extends the amount of time to rehire workers from June 30 to December 31.
This provides additional needed flexibility, especially for borrowers whose operations are significantly impacted by Covid-19.
Big question - what if you opt for an 8 week forgiveness period- do you still need to have the same FTEs in December?
PPPFA relaxes re-hire requirements in specific instances.
Borrowers may receive an exemption from a reduction in loan forgiveness if in good faith they can certify an inability to rehire eligible employees, similarly qualified employees, or return to a similar level of business activity of before February 15, 2020.
PPPFA changes the repayment term from 2 to 5 years.
The 1% interest rate on the loan remains unchanged.
Big question- who will have the authority and what will the process be for changing the terms of the loans?
Many of these changes stand to benefit nonprofit organizations around the country who have taken advantage of the funds available through the PPP. Sign up for our emails HERE — Nielsen Training & Consulting will continue to monitor critical legislation that impacts nonprofits and provide updates and analysis as available. Stay well friends!