Earlier today, in a rare show of bipartisan efforts, the President signed into law the Paycheck Protection Flexibility Act. This is BIG news for anyone who has received a PPP loan or still intends to apply for one. This new law wants to relax some of the previous requirements to qualify for forgiveness of the PPP loan received.
A summary of the new guidelines is below:
- Payroll costs now only need to comprise 60% of total use of PPP funds to be fully forgivable (decrease from the original 75% requirement)
- The 8 Week “covered period” has now been extended to 24 weeks. That’s right – businesses now have a full 24 weeks to use PPP monies towards payroll costs and other allowed expenses. Game changer!
- Deadline to rehire workers is now Dec 31, 2020 (pushed back from June 30, 2020)
- Re-Hire requirement – new law allows a business not to be “penalized” on forgiveness if COVID-19 has prevented the business’s ability to operate at prior levels. So basically, if a company has lower revenues because of the pandemic, they are NOT required to rehire staff to qualify for forgiveness. Another game changer!
- Repayment of loan portion now over five years (from 2 years)
There hasn’t been a lot to celebrate lately, but this one is a big win for small businesses. The impact of this new law is that the vast majority of our clients will now qualify to have their PPP loan fully forgiven. Most every small business we work with needs a little help right now, and this is a plus.
We fully expect to see changes with the SBA Loan Forgiveness application. That may take a few weeks, based on prior experience. So as hard as it may be to be patient with all that is going on in the world today, we highly encourage you to sit tight and await those clarifications. For ZümiFi clients, we are here to support you in completing those forgiveness applications once the timing is right. But this got simpler for most under these new guidelines, so it’s worth the wait to be efficient and only handle that forgiveness application once if possible.
If you have questions, or concerns about the PPP or how this new legislation will impact on our particular PPP loan forgiveness, give us a call.
ZümiFi has your back!