Paycheck Protection Program (PPP) Changes Are Here
As the coronavirus continues to impact the U.S. economy, Federal lawmakers have passed the Paycheck Protection Program Flexibility Act (PPPFA) to loosen restrictions on original Paycheck Protection Program (PPP) provisions, making it easier on employers to weather the pandemic. Here’s what you need to know.
When Were Changes Made?
President Trump signed the Paycheck Protection Program Flexibility Act (PPPFA) on June 5, 2020, after the legislation passed first through the House of Representatives and then was approved by unanimous consent in the Senate.
UPDATED: When is the Application Deadline?
These relaxed requirements help businesses that have already qualified for and received funds from the PPP.
Yet if you haven't applied for loans or heard back from your financial institution regarding your status, remember that the PPP application deadline is June 30, 2020, so act quickly. Many new tools make it easy to apply for funds, but beware scammers and other disreputable sources requesting information regarding your finances.
What Changes Were Made?
In essence, employers can view the PPPFA as an attempt to correct many of the issues found in the PPP.
Three of the main changes include:
- Spend Period Extended: The first iteration of the PPP required participants to use funds within eight weeks of allocation. This has been amended and extended to 24 weeks, meaning employers can use these funds during the reopening period (versus being required to use them while still shut down due to local and regional shelter-in-place guidelines).
- Required Payroll Expenditure Updated: Originally, the PPP required participants to utilize at least 75% of allocated funds towards payroll; this amount has been lowered to 60%. However, borrowers must spend at least this amount on salaries and payroll to meet loan forgiveness requirements.
- Repayment Term Extended: For participants whose loans aren’t forgiven, the repayment term has been extended from two years to five years.
What About Changes to Staffing Requirements?
Thankfully, the PPPFA also addresses employer concerns about rehiring former employees, including in the instance that a rehire offer is rejected.
Consider the following adjustments to staffing requirements:
- Rehire Deadline Pushed Back: Given the ongoing nature of the pandemic—and subsequent efforts to reopen businesses amid changing municipal safety guidelines—employers now have until December 31 to rehire workers back to pre-COVID-19 levels. The previous deadline was June 30. If this provision is met, the loan can be fully forgiven.
- Rehire Requirements Eased: Employers can now still qualify for loan forgiveness with the following exceptions in place: If an employee rejects a rehire offer, if the business is unable to return to pre-pandemic levels of economic activity needed to rehire staff, and if the business cannot find qualified employees to hire. PPPFA indicates Feb. 15, 2020, as the date of regular business operations.
It can’t be stressed enough that we live in an uncertain time. Additional amendments or adjustments may be implemented if coronavirus cases spike again, leading to stricter stay-at-home guidelines.
As always, we recommend staying as informed as possible on relevant state and local regulations to help keep your business and employees safe. If you’re considering returning your employees to work, consult our Return-to-Work Readiness Checklist to see how prepared you are to reopen and review CDC guidelines for reopening your workplace.
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